Consumers are feeling slightly better about the economy but are uncertain about inflation.
Consumer sentiment about the economic environment inched up by about 2% in April, according to preliminary results from the University of Michigan’s monthly Surveys of Consumers, which were released Friday (April 14).
The rise was driven by low-income consumers, as there was a decline in sentiment among high-income consumers, according to the report.
“While consumers have noted the easing of inflation among durable goods and cars, they still expect high inflation to persist, at least in the short run,” Surveys of Consumers Director Joanne Hsu said in the report. “On net, consumers did not perceive material changes in the economic environment in April.”
Consumer sentiment in April stood about 3% below where it was a year ago but 27% above the all-time low recorded in June 2022, according to the report.
Year-ahead inflation expectations rose from 3.6% in March to 4.6% in April.
“These expectations have been seesawing for four consecutive months, alternating between increases and decreases,” Hsu said in the report. “Uncertainty over short-run inflation expectations continues to be notably elevated, indicating that the recent volatility in expected year-ahead inflation is likely to continue.”
Consumers’ long-run inflation expectations, on the other hand, remained “remarkably stable,” Hsu said, as they were gauged at 2.9% for the fifth consecutive month and within the narrow range of 2.9% to 3.1% that’s been seen for 20 of the last 21 months.
As PYMNTS reported Wednesday (April 12), consumers are still grappling with the high cost of essentials even as inflation slows.
The Consumer Price Index (CPI) 12-month reading is now at 5% — the lowest level in roughly two years and a far cry from the 9.1% CPI reading from June of last year — but clothing, shelter and food remain expensive, according to the Bureau of Labor Statistics.
PYMNTS research has found that consumers expect inflation to last well into 2024.
Seventy percent of grocery shoppers and 67% of retail customers expect significant price increases in the next 12 months, according to the March edition of the PYMNTS “Consumer Inflation Sentiment” report.
