US consumer sentiment falls as inflation fears rise

US consumer sentiment fell in August after two months of gains, with inflation expectations still elevated, preliminary University of Michigan survey data showed Friday.

The survey's consumer sentiment index came in at 51.0, down from 55.2 in July. Survey director Joanne Hsu said sentiment fell about 8 percent in August.

Expectations for inflation over the year ahead edged up to 4.3 percent from 4.2 percent in July. Hsu said the reading was well above the 3.4 percent level seen in February before the Iran conflict began, and above all 2024 readings.

Long-run inflation expectations held at 3.3 percent for a third consecutive month.

The survey also showed that 92 percent of consumers expected their income growth to continue lagging inflation. Hsu said expected business conditions fell 11 percent for the short run and 17 percent for the long run.

The data came as prolonged inflation, the US war against Iran and President Donald Trump's tariff policies weighed on the economy. The survey showed weaker sentiment across the political divide, with Republicans recording the largest month-to-month decline.