Consumer Sentiment Weakens as Inflation Expectations Hit Highest Since May

12:43 PM EDT, 10/09/2026 (MT Newswires) -- US consumer sentiment fell in October as inflation expectations reached their highest levels since May, preliminary results of a University of Michigan survey showed Friday. The main sentiment index decreased 3.7% sequentially to 46.3 this month. The consensus was for a 47.6 print in a Bloomberg poll. Year-ahead inflation expectations edged up to 4.7% in October from 4.6% last month, while the five-year price growth forecast ticked higher to 3.5% from 3.4%, according to the survey. "Inflation expectations over both time horizons increased for the second straight month to their highest readings since May," Surveys of Consumers Director Joanne Hsu said. The gauge for current economic conditions tumbled 12% sequentially to 44.7 this month, while the expectations index increased 2.2% to 47.3, the survey showed. "While year-ahead expectations for personal finances and business conditions crept up slightly, buying conditions for durables plummeted amid high prices and borrowing costs," Hsu said. "Frustration over cost-of-living continues to mount, as consumers across the political spectrum believe that the trajectory of the economy has weakened since the beginning of the year." Separately, Oxford Economics said elevated gasoline prices and higher borrowing costs are consumers' main concerns regarding current economic conditions, with sentiment and spending likely to face similar headwinds next year. "Although high-income consumers will keep a floor under spending, low-income consumers will find it difficult to weather elevated inflation and higher borrowing costs," Grace Zwemmer, US economist at Oxford Economics, said in remarks e-mailed to MT Newswires. US retail gasoline prices averaged $4.3718 per gallon Friday, compared with $3.1106 a year ago, according to data from AAA, a travel organization that tracks fuel prices in the country. Crude oil prices have advanced for three straight months through September amid fears of prolonged global supply disruptions driven by the US-Iran conflict. Earlier this week, a survey by the Federal Reserve Bank of New York showed that US consumers' one-year-ahead inflation outlook reached the highest in more than three years in September, while labor market expectations "mostly improved." Markets are currently pricing in a nearly 81% probability that the Fed will keep its benchmark rate steady later this month, with the remaining odds in favor of a second consecutive 25-basis-point hike, as the central bank looks to tame inflation, according to the CME FedWatch tool.