Consumer sentiment holds steady in June, despite concerns about high prices

Consumer sentiment held steady in June, falling 1% from May, according to the newest University of Michigan Surveys of Consumers.

Americans said they believe inflation will continue to weaken but are concerned about high prices and weak incomes affecting their personal finances.

“Over the past two years, our surveys clearly reveal that consumers distinguish between their experiences with high price levels and their views of overall inflation rates,” Surveys of Consumers Chief Economist Joanne Hsu said in a statement.

“On one hand, they recognize that inflation has softened substantially and expect that trend to continue,” she said. “On the other hand, slowing inflation does not generally lead to reductions in overall price levels; the persistence of high prices continue to exert pain on household budgets.”

About 46% of respondents in the June survey said high prices had eroded their living standards. Just 12% said it is a good time to buy a house — a reflection of near-record home prices and mortgage rates that are more than double what they were two years ago.

While consumers expect home values to continue increasing in the short and long term, a growing percentage of consumers expect interest rates to fall in the coming year.

The June consumer sentiment report comes hours after the Commerce Department reported the core personal consumption expenditures price index increased 2.6% compared with a year ago — the lowest annual rate since March 2021. While personal incomes rose 0.5% in May, consumer spending increased by 0.2%.