Consumer sentiment hits fresh record low in May as Iran war fuels inflation worries

Consumer sentiment has tumbled to a fresh record low in May as fears of higher prices grow due to the U.S.-Iran war and elevated oil prices, the University of Michigan's Surveys of Consumers said Friday.

The index of consumer sentiment fell to 44.8 from a preliminary reading of 48.2. It's also well below the 49.8 level seen at the end of April.

"Consumer sentiment fell for the third straight month as supply disruptions in the Strait of Hormuz continue to boost gasoline prices. Sentiment is now just below the previous historical trough seen in June 2022," Surveys of Consumers Director Joanne Hsu said in a statement. "Critically, consumers appear worried that inflation will increase and proliferate beyond fuel prices, even in the long run."

Indeed, inflation expectations over the year ahead rose to 4.8% from 4.7% last month. That's well above the 3.4% reading seen in February, before the war began.

Longer-term inflation is expected to rise 3.9%, up from a 3.5% reading in April.

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