Consumer sentiment in US rising amid improving inflation expectations

The preliminary US Consumer Sentiment Index for July, calculated by the University of Michigan, rose to a five-month high of 61.8 from 60.7 in June. However, the index remains below levels seen last year.

The improvement in sentiment is related to the optimistic outlook for the economy and inflation. Thus, according to consumers' expectations, price growth in the coming year will amount to 4.4% year-on-year. This is lower than the 5% expected last month. In the next five to ten years, the rate of inflation will be 3.6% per year, according to respondents' estimates. Both indicators hit a record low fpr the past five months.

At the same time, concerns about tariffs continue to limit optimism regarding economic prospects. As noted by director of the survey Joanne Hsu, consumers' expectations about business conditions, the labor market, and even their own incomes are still weaker than they were a year ago. However, the risks of worst-case scenarios have diminished, she said.