Investing.com – U.S. consumer sentiment unexpectedly dropped in August, according to a report published on Friday.
The preliminary publication of the data for August from the University of Michigan's Consumer Survey Center showed that consumer sentiment decreased to 95.3 from 97.9 a month earlier. That was it's lowest level since September 2017.
Analysts had forecast a rise to 98.1.
The current conditions indicator fell to 107.8 in August, from the previous 114.4.
Additionally, consumer expectations held steady at 87.3.
Meanwhile, inflation expectations for the next 12 months held steady at 2.9%, while the five-year gauge increased to 2.5% from 2.4%.
The survey’s chief economist Richard Curtin indicated that the decline was concentrated among households in the bottom third of the income distribution.
“The dominating weakness reflected much less favorable assessments of buying conditions, mainly due to less favorable perceptions of market prices,” he added.
Curtin pointed out that consumers held unfavorable views on buying conditions for large household durables and vehicles.
“The data suggest that consumers have become much more sensitive to even relatively low inflation rates than in past decades,” this economist noted, adding that the falloff in favorable price perceptions was much larger than ever before recorded.
“Overall, the data indicate that consumers have little tolerance for overshooting inflation targets, and to the benefit of the Fed, interest rates now play a more decisive role in purchase decisions,” Curtin concluded.