The January preliminary survey of the University of Michigan sentiment index indicates a value of 64.6 points, clearly above the 59.7 points in December. Analysts had expected a less marked improvement, with the average forecast set at 60.7 points.
The report highlights that short-term inflation expectations in the US fell to their lowest level in nearly two years, providing stronger than expected support to the overall consumer sentiment reading. Specifically, respondents said they expect prices to rise 4% next year, the lowest since April 2021, compared to 4.4% in December.
As for 5-10 year expectations, consumers are expecting inflation of 3%, compared to 2.9% the previous month. The Federal Reserve watches long-term views especially carefully, as they can be self-fulfilling and lead to higher prices.
Data released yesterday showed that US inflation continued to slow in December, providing further evidence that price pressures have peaked and offering the Fed an opportunity to moderate the pace of interest rate hikes next month. meeting.