US consumer sentiment drops by 4.2% in Aug as West Asia conflict drags on

US consumers' one-year inflation expectations rose to 4.3% in August from 4.2% in July as the Middle East conflict raised concerns over living costs.

US consumer sentiment slumped ??in early August ​amid worries about the rising cost of living because ??of the conflict in the Middle East, a survey showed on Friday.  The University of Michigan's ‌Surveys of Consumers said ​its Consumer Sentiment Index ​dropped to 51.0 this month from ​55.2 in July, ending two straight months of improvement. Economists polled by Reuters had forecast the index would be at 54.5.  The ​decline in sentiment occurred across the ‌political spectrum, with an especially big month-to-month drop ​among Republicans. "Sentiment among Republicans is now 19 per cent below readings just prior to the Iran conflict and the ‌lowest since the ​2024 election," said Joanne ‌Hsu, the director of the Surveys ‌of Consumers.  "Although ??the early-month weakening in sentiment was pervasive ​across various demographic groups, notably large reductions were seen among older consumers, ​lower-income consumers, and those without a college degree."  The survey's measure of consumer ‌expectations for inflation over the next year increased ‌to 4.3 per cent from 4.2 per cent in July. Consumers' expectations for inflation over the next five years were unchanged at 3.3 per cent.