The final
reading for the January Reuters/Michigan index of consumer sentiment came in at
71.1 compared to the flash reading of 73.2 and the December final reading of 74.0. This marked the highest reading since April (77.2). This was the first decrease in the indicator in six
months and represented the lowest reading since October 2024 (70.5).
Economists
had expected the indicator to remain unrevised at 73.2.
The details of
the latest Surveys of Consumers of the University of Michigan revealed that the
index of current economic conditions fell by 1.5 per cent m-o-m to 74.0 this
month, while the index of consumer expectations declined by 5.5 per cent m-o-m
to 69.3.
The survey also
showed that the year-ahead inflation expectations surged from 2.8 per cent in December 2024 to 3.3 per cent
in January 2025, in line with the preliminary
estimates. This marked the highest reading since May 2024 (3.3
per cent). Meanwhile,
the 5-year inflation expectations soared from 3.0 per cent in December
to 3.2 per cent, compared to the preliminary reading of 3.3 per cent.
Commenting on
the latest results, Joanne Hsu, Surveys of Consumers Director, said that sentiment
declines were broad-based and seen across incomes, wealth, and age groups. She
also noted that concerns over the future trajectory of inflation were visible
throughout the interviews and were tied to beliefs about anticipated policies
like tariffs. “Consumers continued to spontaneously express motives for
buying-in-advance to avoid future price increases, and robust auto and retail
sales data suggest that consumers are indeed acting on these views,” Hsu added.