The September figures for the consumer price index (CPI), released on Friday, showed that inflation has slowed beyond expectations, as the CPI rose a scant 0.1%, seasonally adjusted.
Also released on Friday, the Thomson Reuters/University of Michigan survey of consumer sentiment disappointed predictions by coming in at a preliminary level of 67.9, down from 68.2. It had been expected to rise to 69.0 by economists polled by Reuters. Consumer expectations were at 64.6, which, although down from June’s level of 69.8, showed a substantial increase over September’s 60.9.
Stripping out food and energy, the CPI index was unchanged from August; however, the food index rose 1.4%, for both food at home and food away from home, and gasoline pushed the rise in the energy index, at 5.1% (energy rose 3.8% over the last year).
Some categories, including apparel, used vehicles, recreation, and household furnishings and operations, dropped during September, which offset a substantial increase in medical care (0.3% for medical care commodities and 0.8% for medical care services), and a slight increase for new vehicles (0.1%).
How Consumers Feel
Consumers’ buying plans are low, said Reuters-Michigan consumer sentiment survey director Richard Curtain in a statement.
“Personal financial expectations were near their all-time low, and the steep decline in buying plans was related to uncertainty about consumers' future income prospects,” Curtain said.
Since consumer spending makes up approximately two-thirds of U.S. economic activity and many retailers rely on the period before the holidays to make it through the year, spending is a closely watched indicator. On the positive side, the consumer 12-month economic outlook was up by 9 points, coming in at 70.
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