LONDON (FT) – U.S. consumers were feeling less optimistic about the economy and increasingly worried about an accelerated rise prices, dimming their outlook for the recovery.
The University of Michigan’s consumer sentiment index, which fell to 80.8 from a reading of 85.5 in the previous month, took the shine off data released earlier on Friday showing a rebound in retail sales during June, propelled by strong demand at electronics stores, apparel outlets and restaurants.
“Rather than job creation, halting and reversing an accelerating inflation rate has now become a top concern,” said Richard Curtin, chief economist for the university’s surveys of consumers.
Shoppers are facing “sticker shock” on a range of goods from chicken to used cars. The consumer price index jumped 5.4 per cent in June from a year ago, a 13-year high, following a 5 per cent rise the previous month.
Wholesale prices have also climbed, portending an increase in costs for consumers. The producer price index was up 7.3 per cent last month, the biggest yearly gain since at least 2010.
Federal Reserve officials have stood by forecasts that surging inflation will be shortlived, but some lawmakers have argued that the central bank and the Biden administration are underestimating the risks that inflation poses to the economic recovery.