U. Mich. Consumer Index Slips Amid Unexpected Frustration Over High Prices

Consumer sentiment inched down in early October amid continued frustration over the prices of goods and services.

While it dipped a “meager” 1.7% or 1.2 index points — a figure that is within the margin of error — it marked a change from the gains seen during the previous two months, according to preliminary results from the University of Michigan Surveys of Consumers for October.

Consumer sentiment remained 8% stronger than a year ago and almost 40% higher than the low point seen in June 2022, according to a Friday (Oct. 11) press release.

“While inflation expectations have eased substantially since then, consumers continue to express frustration over high prices,” Joanne Hsu, director of the Surveys of Consumers, said in the release.

The index of consumer sentiment reading of 68.9 was lower than the 70.8 forecast by economists, Reuters reported Friday.

Bloomberg, too, reported Friday that the decline in consumer sentiment was unexpected. The economists itsurveyed predicted a reading of 71. The report noted that the survey found that the amount that consumers expect prices to climb over the next year increased for the first time in five months.

The Bureau of Labor Statistics (BLS) reported Thursday (Oct. 10) in its Consumer Price Index (CPI) that there was an overall slowing of inflation on an annualized basis.

Still, the 0.2% month-over-month increase was “hotter” than some expected, PYMNTS reported.

The BLS reported Friday in its Producer Price Index (PPI) that wholesale prices were unchanged, with a 0.2% increase in the index for final demand services offsetting a 0.2% decline in prices for final demand goods.

During the previous month, the PPI rose 0.2%.

The Surveys of Consumers released Friday by the University of Michigan also found that long run business conditions rose to the highest reading in six months and that current and expected personal finances softened, per the press release.

Consumers’ views of the economy have been little affected by news of conflicts in the Middle East and Ukraine, with less than 5% of consumers mentioning these issues spontaneously, Hsu said in the release.

“With the upcoming election on the horizon, some consumers appear to be withholding judgment about the longer-term trajectory of the economy,” Hsu said.