US Consumer Sentiment Declines for First Time in Three Months

US consumer sentiment fell for the first time in three months as households worried about worsening business conditions and rising inflation.

The University of Michigan's preliminary August sentiment index decreased to 51 in August, according to the survey released Friday, from a final reading of 55.2 in July.

The median forecast from a Bloomberg survey of economists had projected a reading of 55.

Consumers expect prices to rise 4.3% over the next year, up slightly from the prior month and well above readings before the Iran conflict started in February. They also saw costs rising at an annual rate of 3.3% over the next five to 10 years.

"Although the early-month weakening in sentiment was pervasive across various demographic groups, notably large reductions were seen among older consumers, lower-income consumers, and those without a college degree," Joanne Hsu, director of the survey, said in a statement. "These groups are all particularly vulnerable to any erosion of purchasing power stemming from inflation."

Sentiment for the short- and long-term economic outlook deteriorated after posting gains the previous two months.

Labor-market expectations have changed little since the start of the year. Consumers are increasingly concerned about inflation and less so about unemployment, the survey showed.

The survey period includes responses from July 28 to Aug. 10, a span that saw national average gasoline prices hover above $4 a gallon.A separate report Friday showed that US retail sales fell in July by the most in more than a year as consumers pulled back on purchases of autos and at online stores.Households have been caught between rising prices and slow wage growth. Real average hourly earnings declined 0.2% in July from a year earlier, according to government data released earlier this week, extending a string of weak readings since the Iran war began.