US consumer sentiment fell to a record low in April as households shrugged off a ceasefire in the war with Iran, remaining focused on the inflation fallout from the conflict.<\/p>\n
The University of Michigan\u2019s surveys of consumers said its consumer sentiment index dropped to a final reading of 49.8 this month, an all-time low. The reading was a slight improvement, however, from the 47.6 reported earlier in the month.<\/p>\n
Economists polled by Reuters had forecast the index at 48.0. It was at 53.3 in March. The deterioration in sentiment was across political party affiliations and among consumers with investments in the stock market.<\/p>\n
The Iran war has disrupted shipping in the Strait of Hormuz, boosting the price of oil and, ultimately, the cost of petrol and diesel. Prices for other commodities, including fertilisers, petrochemicals and aluminium, which will soon affect consumers, have also surged.<\/p>\n
Tehran effectively \u200bclosed the strait after the start of the war \u200bon February 28. President Donald Trump this week indefinitely extended the ceasefire with Iran, though a US navy blockade of Iranian ports remained in effect.<\/p>\n
\u201cThe Iran conflict appears to influence consumer views primarily through shocks to fuel and potentially other prices,\u201d said Joanne Hsu, the director of the surveys of consumers. \u201cIn contrast, military and diplomatic developments that do not lift supply constraints or lower energy prices are unlikely to buoy consumers.\u201d<\/p>\n
Petrol and diesel prices increase<\/p>\n
The national average retail petrol price has hovered above $4 (R66.15) a gallon this month, with diesel well above $5 (R82.69) a gallon, data from the US energy information administration showed.<\/p>\n
A Reuters\/Ipsos poll on Friday showed a clear majority of Americans blamed Trump for surging petrol prices, which are weighing on his Republican Party before November\u2019s congressional midterm elections.<\/p>\n
Expensive diesel is likely to raise prices of goods transported by road. Economists said while the correlation between consumer sentiment and spending was weak, they expected households, especially lower-income groups, to scale back on consumption.<\/p>\n
\u201cWe expect the hit to real disposable income growth from higher fuel prices will slow consumption growth,\u201d said Grace Zwemmer, a US economist at Oxford Economics. \u201cThe impact will be mostly felt by low- and middle-income households, since a larger share of their overall spending goes towards petrol.\u201d<\/p>\n
The survey\u2019s measure of consumer expectations for inflation over the next year jumped to 4.7% this month from 3.8% in March. April\u2019s reading exceeded levels that prevailed in 2024 and remained well above the 2.3%-3.0% range seen in the two years before the Covid-19 pandemic.<\/p>\n
Consumers\u2019 expectations for inflation over the next five years climbed to 3.5% from 3.2% last month.<\/p>\n
Higher inflation expectations added to a survey from S&P Global on Thursday showing a measure of prices charged by businesses for their goods and services jumped in April to the highest level in nearly four years in strengthening financial market expectations that the Federal Reserve would probably not cut interest rates this year.<\/p>\n
\u201cMore pain will come as higher transportation costs are passed along for food, appliances, toys and every other item that travels on a ship, car or plane,\u201d said Heather Long, chief economist at Navy Federal Credit Union. \u201cSentiment won\u2019t improve until the Strait of Hormuz is open and there is a permanent end to the conflict.\u201d<\/p>\n
Reuters<\/p>\n","protected":false},"excerpt":{"rendered":"US consumer sentiment fell to a record low in April as households shrugged off a ceasefire in the…\n","protected":false},"author":2,"featured_media":397506,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,205373,219,1943,16609,111,139,69,67524,6149],"class_list":["post-398188","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-consumer-sentiment-index","tag-economy","tag-inflation","tag-iran","tag-new-zealand","tag-newzealand","tag-nz","tag-us-consumer","tag-war"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/398188","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=398188"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/398188\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/397506"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=398188"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=398188"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=398188"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}