US consumer sentiment grew in December to its highest level since April, while year-ahead inflation expectations logged its first month-over-month increase in seven months, final results from the University of Michigan's Surveys of Consumers showed Friday. The main sentiment gauge rose to 74 this month from 71.8 in November, with a consensus for a 74.2 print in a survey compiled by Bloomberg. "Consumer sentiment confirmed its early-month reading, rising for the fifth consecutive month and reaching its highest value since April," Surveys of Consumers Director Joanne Hsu said.
"Buying conditions exhibited a particularly strong 32% improvement, primarily due to a surge in consumers expecting future price increases for large purchases." The index for current economic conditions advanced 18% month over month to 75.1 in December, while the expectations measure declined 4.7% to 73.3, as indicated by the survey. "Broadly speaking, consumers believe that the economy has improved considerably as inflation has slowed, but they do not feel that they are thriving," Hsu remarked.
"Sentiment is currently about midway between the all-time low reached in June 2022 and pre-pandemic readings." Year-ahead inflation expectations rose to 2.8% this month from 2.6% in November, the first sequential increase since May, per the report. The five-year price growth outlook eased to 3% from 3.2%, the survey revealed. Earlier in the week, the Federal Reserve reduced its benchmark lending rate by 25 basis points and flagged fewer cuts ahead than projected in September.
The central bank's Federal Open Market Committee on Wednesday reiterated that although inflation has made progress toward its 2% target, it remained "somewhat" elevated..