NEW YORK — U.S. consumer sentiment fell to its lowest level in five months ahead of the midterm elections, weighed down by high prices and elevated interest rates.
The University of Michigan said on the 23rd that the final reading of its consumer sentiment index for October came in at 48.0, down slightly from last month's final reading of 48.1 and the weakest level in five months. The figure was 10.4% lower than the 53.6 recorded in the same month a year earlier.
The current economic conditions index, which reflects consumers' assessment of the present economy, dropped to 46.7 this month from 50.9 in September. The consumer expectations index, which gauges the outlook ahead, rose to 48.8 from 46.3 over the same period. Inflation expectations for the next year climbed to 4.7% from 4.6%, while five-year inflation expectations, which reflect consumers' longer-term price outlook, rose to 3.5% from 3.4%. Both measures were at their highest since May.
Joanne Hsu, director of the survey, said the decline in the current conditions index was driven entirely by a deterioration in buying conditions for durable goods, noting that the related gauge plunged 18% on concerns over high interest rates and purchase costs. "With both short- and long-term inflation expectations rising, there is a risk that expectations of high inflation become entrenched," she said, adding that consumers agreed, regardless of political affiliation, that inflation would be an overwhelmingly greater risk than unemployment over the next year.