US Consumers Signal Warning: Inflation Rises, Optimism Falls
US consumer sentiment fell to a three-month low in March, while one-year inflation expectations surged as the Middle East war pushed up gasoline prices. The University of Michigan's final sentiment index fell to 53.3 from a preliminary reading of 55.5, with the survey period covering February 17–March 23 and about two-thirds of responses collected after the Iran war began.
Consumers now expect prices to rise 3.8% in the next 12 months, up from 3.4% the previous month and the largest increase since April 2025. Longer-term inflation expectations have eased slightly. The surge in gasoline prices is said to have increased by about US$1 per gallon on average since the war began and risks adding to cost-of-living pressures, prompting households to hold back on discretionary spending.
The current conditions component fell to 55.8 from 56.6, while the expectations index fell to a four-month low. Consumer perceptions of expected financial conditions also fell to a five-month low. In a Bloomberg survey, economists raised their inflation projections for the rest of the year while lowering expectations for growth, consumer spending, and employment—a combination that could reinforce the "energy inflation" narrative and limit the scope for monetary policy easing.
Source: Newsmaker.id
