Consumers are growing more concerned about the path forward for inflation over the next year.
The latest consumer sentiment survey from the University of Michigan revealed that consumers expect inflation to hit 2.9% in a year, an increase from last month’s expectation of 2.6%. December’s reading is the highest in six months but within the 2.3% to 3% range seen in the two years before the pandemic.
Expectations for long-run inflation slipped higher, though, falling to 3.1% from 3.2% the month prior.
The overall consumer sentiment index popped to a reading of 74, up from 71.8 in November.
Overall, consumer views on inflation varied based on political party, Surveys of Consumers Director Joanne Hsu noted.
“Democrats voiced concerns that anticipated policy changes, particularly tariff hikes, would lead to a resurgence in inflation,” Hsu said in the release. “Republicans disagreed; they expect the next president will usher in an immense slowdown in inflation.”
Also in this month’s data, the survey showed a large increase in buying conditions for durable goods, which boosted current economic conditions by more than 20%.
“Rather than a sign of strength, this rise in durables was primarily due to a perception that purchasing durables now would enable buyers to avoid future price increases,” Hsu said.
