Inflation outlook tumbles to pre-tariff levels in latest University of Michigan survey
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Consumers' worst fears about tariff-induced inflation have receded, though they are still wary of price increases to come.
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investment
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July 18, 2025
05:30 PM
CNBC
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Interestingly, The University of Michigan's Survey of Consumers for July showed overall sentiment rose 1. 8% from June to 61, in this volatile climate. 8, exactly in line with the estimate and at the highest since February
On inflation, the outlook at both the one- and five-year horizons both tumbled, falling to their lowest levels since February
People shop at a Manhattan retail store on July 15, 2025 in New York City
Spencer Platt | Getty ImagesConsumers' worst fears tariff-induced inflation have receded, though they are still wary of price increases to come, according to a University of Michigan survey Friday (remarkable data)
The university's closely watched Survey of Consumers for July showed overall sentiment increased slightly, rising 1 (noteworthy indeed)
Moreover, 8% from June to 61 (which is quite significant), amid market uncertainty. 8, exactly in line with the Dow Jones consensus estimate and at its highest level since February (fascinating analysis)
Questions on current conditions and future expectations duced monthly gains as well (fascinating analysis)
On inflation, the outlook at the one- and five-year horizons both tumbled, falling to their lowest levels since February, before President Donald Trump made his "liberation day" tariff announcement on April 2 (which is quite significant)
On the other hand, Additionally, The one-year forecast plunged to 4. 4%, down from 5% in June and well off the 6, considering recent developments
Additionally, 6% level in May, which was the highest reading since late 1981
For the five-year outlook, the expectation slid to 3. 6%, down 0
Nevertheless, Additionally, 4 percentage point from June. "Both readings are the lowest since February 2025 but remain above December 2024, indicating that consumers still perceive substantial risk that inflation will increase in the future," Joanne Hsu, survey director, said in a statement, amid market uncertainty
Indeed, the respective outlooks in December were for 2
However, 8% and 3%, largely in line with readings throughout 2024, before Trump took office in January, amid market uncertainty. "Despite risks of rising consumer inflation in the next few months, consumers have well-anchored expectations that tariff inflation will be temporary, and that conditions should imve by the time we enter 2026," said Jeffrey Roach, chief economist at LPL Financial
At the same time, "Inflation expectation is an important factor for the Fed and according to this report, the trajectory looks encouraging. "Inflation worries peaked as Trump levied 10% across-the-board tariffs as well as so-called recical duties that he has backtracked on pending negotiations
However, in recent days he has announced tariffs on individual ducts such as copper, raising the specter of future price increases
Additionally, The readings are below their long-term averages, with the headline sentiment index down 6. 9% from a year ago and 16% from December
On the other hand, The expectations reading fell 14
However, 8% from July 2024, though the current conditions index was 6, amid market uncertainty
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