Consumer confidence in the US rose to a five-month high in July. Consumers are still worried about rising inflation

The Zhitong Finance App learned that American consumer confidence rose to its highest level in five months in early July, boosted by falling gasoline prices. However, consumer concerns about future inflation still exist, and the escalation of the situation in the Middle East is once again driving up energy prices, adding uncertainty to subsequent price trends.

According to preliminary data released by the University of Michigan in the US on Friday, the consumer confidence index rose to 54.4 in July from 49.5 in June, which not only hit a five-month high, but also exceeded the expectations of all economists in the media survey.

The data shows that from June to early July, gasoline prices in the US continued to fall, relieving the pressure on household living costs and being the main factor driving the improvement in consumer confidence. However, with the conflict in the Middle East region once again escalating, oil prices have recently risen again, and market concerns about future inflation prospects have intensified.

The survey was conducted from June 23 to July 13, but more than 70% of respondents completed the questionnaire before the US launched a military attack on Iran in early July, so the survey results did not fully reflect the impact of the recent escalation of the geopolitical situation.

The report shows that this round of improvement in consumer confidence covered various age groups, income levels, and political positions, showing a broad recovery trend.

In terms of inflation expectations, consumers expect prices to rise 4.2% in the next year, down from 4.6% in June; long-term inflation expectations for the next five to ten years will remain at 3.3%, the same as last month.

Joanne Hsu, head of consumer research at the University of Michigan, said that consumers are still generally concerned that inflationary pressure may rise again in the future. She pointed out that more and more consumers think that now is a good time to buy products to avoid further price increases in the future.

Meanwhile, American households' evaluations of their own financial situation and overall economic outlook have improved. Among them, the durable goods purchase conditions index rose to the highest level since October last year, reflecting an increase in consumers' willingness to buy.

However, the cost of living is still a major pressure on American households. Although data released this week showed that the US consumer price index (CPI) recorded the biggest monthly decline since the pandemic in June, the overall level of inflation is still significantly higher than the Fed's 2% target.

According to disaggregated data, the current status index reflecting the current economic situation rose to 54.9, a four-month high; the expected index, which measures future economic prospects, rose to 54, the highest level since February this year.