US Consumer Sentiment Falls to Five-Month Low as Inflation Expectations Rise

US consumer sentiment dropped to a five-month low in October as persistent inflation and elevated interest rates weighed on household morale, the University of Michigan reported Friday. The final sentiment index eased to 48 from 48.1 in September, though it beat the preliminary reading and topped all Bloomberg economist estimates. Consumers expect prices to rise 4.7% over the next year, up from 4.6%, and see costs climbing 3.5% annually over the next five to 10 years — both the highest since May. Survey director Joanne Hsu warned that after five years of above-target inflation, rising short- and long-term expectations "expose risks that elevated inflation expectations could become entrenched." A gauge of buying conditions for durable goods fell to a record low, with nearly 70% of consumers expecting interest rates to rise in the year ahead — the highest in more than three years. The current conditions gauge sank to its second-lowest on record. Sentiment improved among Democrats and Republicans but fell among independents for a third straight month. The survey covered responses from Sept. 22 to Oct. 19.