US consumer sentiment deteriorates amid inflation worries

US consumer sentiment deteriorated in May amid concerns about inflation, according to a final reading from the University of Michigan.

The Michigan sentiment index fell to 82.9 from 88.3 in April, but was up from 72.3 in May last year.

The current economic conditions index printed at 89.4 in May, down from 97.2 the month before but up from 82.3 in May 2020.

The index of consumer expectations fell to 78.8 from 82.7 in April and compared to 65.9 in May last year.

Surveys of Consumers chief economist, Richard Curtin, said: "Consumer confidence remained largely unchanged at the reduced level recorded at mid-month. It is hardly surprising that the resurgent strength of the economy produced more immediate gains in demand than supply, causing consumers to expect a surge in inflation.

"Record proportions of consumers reported higher prices across a wide range of discretionary purchases, including homes, vehicles, and household durables - the average change in May vastly exceeds all prior monthly changes.

"The impact of higher prices on discretionary spending will be offset by the more than $2 trillion increase in savings in the past year as well as by improving job prospects - an all-time peak proportion of consumers anticipated declines in the national unemployment rate during the year ahead. While higher inflation will diminish real incomes, the gains in spending will nonetheless be substantial."