Consumer optimism and inflation expectations both increased this month, a forecast that remains cloudy as high inflation continues, according to the University of Michigan’s Surveys of Consumers.
According to the preliminary report, consumer sentiment only increased one point to 59, despite a substantial improvement in current buying conditions for durables as supply constraints eased. The index for current economic conditions increased six points, to 65 from 59 in September.
Sentiment is nine points above the record low in June but remains stunted due to high inflation. Consumer prices increased 8.2 percent in September compared to 12 months earlier, a rise driven by jumps in shelter, food and medical care prices. The median expected year-ahead inflation rate increased to 5.1 percent.
Long-run inflation expectations, which in September fell below the 2.9 percent to 3.1 percent range for the first time since the summer of 2021, increased this month to 2.9 percent.
“Improvement remains tentative, as the expectations index declined by 3 percent from last month,” said Surveys of Consumers Director Joanne Hsu. “Continued uncertainty over the future trajectory of prices, economies, and financial markets around the world indicate a bumpy road ahead for consumers.”