Consumer sentiment in the United States unexpectedly experienced a slight decline in January, as per preliminary figures from the University of Michigan released on Friday.
The University's consumer sentiment index dropped to 73.2 in January from a previous 74.0 in December, contrary to economists' predictions of a rise to 74.5.
This unexpected decrease in the overall index was attributed to a decline in consumer expectations, with the consumer expectations index falling to 70.2 in January compared to 73.3 in December.
Conversely, the index assessing current economic conditions rose to 77.9 in January, up from 75.1 in December.
"January's divergence in present and future outlooks highlights reduced concerns about current living costs, alongside increased uncertainties regarding future inflation trends," commented Joanne Hsu, Director of the Surveys of Consumers.
Furthermore, she noted, "This month's decrease in the expectations index was consistent across political affiliations, with declines of approximately 3% among Independents and 1.5% among Republicans."
The report indicated that projections for year-ahead inflation surged to 3.3% in January from 2.8% in December, marking the highest point since May 2024.
Long-term inflation expectations also rose to 3.3% in January, compared to 3.0% in December.
"This marks only the third instance in the last four years in which long-term expectations have demonstrated such a significant one-month shift," Hsu remarked.
She also observed, "Inflation expectations for both the short and long term increased across various demographic groups, with particularly notable rises among lower-income consumers and Independents."
