Consumer sentiment rallied in July as gasoline prices tumbled and inflation indexes turned negative.
The University of Michigan’s final July sentiment index rose to 55.2 this month, according to data released Friday. That was better than expected and an increase from the preliminary estimate of 54.4. In June, the index fell to 49.5.
Gas prices fell sharply in June and July after soaring as Iran closed the Strait of Hormuz, a crucial bottleneck for oil from the Persian Gulf. Falling gas prices pulled down the consumer price index for June, leading to a negative month-to-month reading.
“Consumer sentiment confirmed its early-month reading, landing almost 12% above June,” said Joanne Hsu, the director of the survey. “Broad-based improvements were seen across all groups by income, education, wealth, age, and political party.”
The biggest improvement came in consumer assessments of current economic conditions, with the present situation index jumping 14.9 percent from June. The gauge of expectations rose 9.3 percent. Both remain sharply down from a year ago.
Year-ahead inflation expectations fell to 4.2 percent from 4.6 percent in June. Prior to the U.S. attack on Iran, consumers were expecting prices to rise 3.4 percent over the coming year. Long-run inflation expectations have been less volatile. In July, these held steady at 3.3 percent, only slightly higher than the upper end of the 2.8 percent to 3.2 percent range seen in 2024.
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