US consumer sentiment falls to eight-month low on high prices

US consumer sentiment eased in July to an eight-month low as high prices continued to weigh on attitudes about personal finances.

The final July sentiment index fell to 66.4 this month from 68.2 in June, according to the University of Michigan. The preliminary reading was 66.

Consumers expect prices will climb at an annual rate of 2.9% over the next year, the lowest in four months and down slightly from the 3% expected in June, the data out Friday showed. They also see costs rising 3% on average over the next five to 10 years, the same as a month earlier.

Sentiment has declined since the first quarter, reflecting a high cost of living and elevated borrowing costs that’s leading to downbeat current views and expectations of personal finances. While the pace of inflation is starting to cool, wage gains have been modest and many Americans have exhausted their pandemic savings.

“Sentiment has lifted 33% above the June 2022 historic low, but it remains guarded as high prices continue to drag down attitudes, particularly for those with lower incomes,” Joanne Hsu, director of the survey, said in a statement.

The current conditions gauge fell to 62.7. That’s the lowest since the end of 2022 and down from July’s 64.1 preliminary reading.

A measure of expectations dropped to 68.8, matching the lowest this year. An index of the outlook for personal finances dropped to the lowest level since October.

Buying conditions for durable goods decreased to the lowest since the end of 2022.

A separate report Friday showed inflation rose at a tame pace in June and consumer spending remained healthy, likely paving the way for a Federal Reserve interest-rate cut soon.