U.S. Consumer Sentiment Edges Lower In January As Inflation Expectations Surge

(RTTNews) - Consumer sentiment in the U.S. has unexpectedly seen a modest deterioration in the month of January, according to preliminary data released by the University of Michigan on Friday.

The University of Michigan said its consumer sentiment index edged down to 73.2 in January from 74.0 in December. Economists had expected the index to inch up to 74.5.

The unexpected dip by the headline index reflected a decrease in consumer expectations, with the index of consumer expectations falling to 70.2 in January from 73.3 in December.

On the other hand, the report said the current economic conditions index climbed to 77.9 in January from 75.1 in December.

"January's divergence in views of the present and the future reflects easing concerns over the current cost of living this month, but surging worries over the future path of inflation," said Surveys of Consumers Director Joanne Hsu.

She added, "Overall, this month's deterioration in the expectations index was seen across political affiliations, including declines of about 3% for Independents and 1.5% for Republicans."

The report said year-ahead inflation expectations soared to 3.3 percent in January from 2.8 percent in December, reaching the highest level since May 2024.

Long-run inflation expectations also surged to 3.3 percent in January from 3.0 percent in December.

"This is only the third time in the last four years that long-run expectations have exhibited such a large one-month change," said Hsu.

She added, "For both the short and long run, inflation expectations rose across multiple demographic groups, with particularly strong increases among lower-income consumers and Independents."