Consumer Sentiment Jumps in July as Gas Prices Fall and Inflation Expectations Ease

The University of Michigan’s consumer sentiment index climbed to 55.2 in July, beating expectations as falling gasoline prices and softer inflation readings improved Americans’ views of current economic conditions.

By yourNEWS Media Newsroom

U.S. consumer sentiment improved more than expected in July, rebounding sharply from June as gasoline prices declined and inflation measures moved lower.

The University of Michigan’s final consumer sentiment index rose to 55.2 in July, according to data released Friday. The reading exceeded the preliminary estimate of 54.4 and marked a substantial increase from June, when the index stood at 49.5.

Much of the improvement followed a sharp retreat in gasoline prices during June and July. Fuel costs had previously surged after Iran closed the Strait of Hormuz, a major passageway for oil shipments from the Persian Gulf.

As gasoline prices fell, they helped push down the June consumer price index enough to produce a negative month-over-month reading.

“Consumer sentiment confirmed its early-month reading, landing almost 12% above June,” said Joanne Hsu, director of the University of Michigan survey. “Broad-based improvements were seen across all groups by income, education, wealth, age, and political party.”

Consumers showed the strongest improvement in their assessments of current economic conditions. The index measuring present conditions rose 14.9% from June, while the measure tracking expectations for the future increased 9.3%.

Despite the monthly rebound, both measures remained well below their levels from a year earlier.

Inflation expectations also moved lower in July. Consumers said they expected prices to increase 4.2% over the next year, down from 4.6% in June.

Before the U.S. attack on Iran, year-ahead inflation expectations had stood at 3.4%, indicating that consumers continued to anticipate somewhat stronger price increases than they had before the conflict and resulting energy-market disruptions.

Longer-term inflation expectations were considerably more stable. The survey’s measure of long-run inflation expectations held at 3.3% in July.

That figure remained only slightly above the 2.8% to 3.2% range recorded during 2024, suggesting that the recent volatility in short-term inflation expectations has not produced a comparable shift in consumers’ longer-term outlook.

The July figures therefore showed a broad improvement in consumer attitudes after June’s decline, with falling energy costs helping lift perceptions of current economic conditions while short-term inflation expectations eased from the previous month.