WASHINGTON (Reuters) - U.S. consumers believe price pressures will ease considerably over the next 12 months, with a survey on Friday showing their one-year inflation outlook falling in January to the lowest level since the spring of 2021.
The University of Michigan Surveys of Consumers said the one-year inflation outlook slipped to a preliminary reading of 4.0% this month from 4.4% in December. That was the lowest reading since April 2021. At the five-year horizon, the outlook rose to 3.0% from 2.9% last month, staying within the narrow 2.9%-3.1% range for 17 of the last 18 months.
The survey came on the heels of government data on Thursday showing consumer prices fell for the first time in more than 2-1/2 years in December. Inflation is abating as the Federal Reserve's aggressive interest rate hikes cool demand, and supply chain bottlenecks ease.
With inflation subsiding, consumers' spirits are perking up. The University of Michigan's preliminary January reading on the overall index of consumer sentiment came in at 64.6, up from 59.7 in the prior month. Economists polled by Reuters had forecast a preliminary reading of 60.5.