Consumer sentiment fell to a new record low in May as the war between the U.S. and Iran and soaring oil prices heightened concerns about rising prices, University of Michigan Consumer Research said Friday.
The consumer sentiment index fell to 44.8 from the preliminary figure of 48.2. It is also well below the 49.8 level at the end of April.
“Consumer sentiment has declined for the third consecutive month as gas prices continue to rise due to supply disruptions in the Strait of Hormuz,” Consumer Research Director Joan Hsu said in a statement. “Sentiment is now just below the previous historic low seen in June 2022.” “Importantly, consumers appear concerned that inflation will rise and extend beyond fuel prices even in the long run.”
In fact, inflation expectations for the coming year rose to 4.8% from 4.7% last month. This is significantly higher than the 3.4% in February, before the war started.
Long-term inflation is expected to rise by 3.9%, up from 3.5% in April.
Markets around the world have been volatile in recent days as investors weigh a long period of high oil prices and how quickly the war will end.
The 30-year Treasury yield hit its highest level this week since before the financial crisis. The benchmark 10-year government bond yield also reached its highest level in a year.
The US Federal Reserve has also indicated that it is reluctant to cut interest rates amid inflationary pressures.
“While measures of long-term inflation expectations remain relatively low and appear to be firmly anchored, some one- to five-year expectations have risen since early 2026, which is concerning,” Fed Director Christopher Waller said in a speech Friday.
