A report from
the University of Michigan revealed on Friday that the preliminary reading for
the Reuters/Michigan index of consumer sentiment decreased 1.1 per cent m-o-m
to 73.2 in early January 2025. This marked the first drop in the index in six
months.
Economists had anticipated
the indicator would slip to 73.8 this
month, marginally down from the December
2024 final reading of 74.0.
According to
the report, the index of current economic conditions jumped 3.7 per cent m-o-m to 77.9 in January, while the index of
consumer expectations declined 4.2 per cent m-o-m to 70.2.
The report also
revealed that the estimates of year-ahead expected inflation climbed from 2.8
per cent in December 2024 to 3.3
per cent early this month, the highest level since May 2024 (3.3 per cent). At the same time, the 5-year expected inflation soared from 3.0 per cent to 3.3
per cent, the highest level since June 2008 (3.4 per cent).
Commenting on
the latest survey, Surveys of Consumers
Director Joanne Hsu noted that for both the short and long run, inflation
expectations rose across multiple demographic groups. She, however, emphasized
that inflation uncertainty - as estimated using the interquartile range in
inflation expectations - had climbed considerably over the past year, though it
remains well below levels seen in the 1970s.