U.S. consumer sentiment falls to seven-month low

WASHINGTON (Reuters) – U.S. consumer sentiment fell to a seven-month low in August as households worried about rising prices amid a robust economy and tensions between the United States and its main trade partners.

The University of Michigan on Friday said its consumer sentiment index fell to a reading of 96.2 at end of August. While that was an improvement from 95.3 early in the month, it was the lowest reading since January and was down from 97.9 in July. The survey’s current conditions sub-index of consumer expectations dropped to 110.3 from July’s reading of 114.4.

“The dominating weakness was related to less favorable assessments of buying conditions, mainly due to less favorable perceptions of market prices and to a lesser extent, rising interest rates,” said Richard Curtin, the University of Michigan Surveys of Consumers chief economist.

Consumers’ inflation expectations increased this month.

“Although a higher inflation rate is partly due to the potential for increased tariffs, the main cause has been the expectation of robust economic growth,” said Curtin.

The Trump administration’s protectionist trade policy has led to an escalating trade war with China and tit-for-tat import tariffs with other trading partners, including the European Union, Canada and Mexico.

The economy grew at a 4.2 percent annualized rate in the second quarter, the fastest in nearly four years and almost double the 2.2 percent pace notched in the January-March period.

Prices have been rising, with an inflation measure tracked by the Federal Reserve hitting the U.S. central bank’s 2 percent target in July for the third time this year.

The University of Michigan’s sentiment survey is at odds with the Conference Board survey published on Tuesday, which showed consumer confidence surging to a near 18-year high in August.

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