Consumer Sentiment Reaches 4-Month Low as Inflation Expectations Increase

01:38 PM EDT, 09/25/2026 (MT Newswires) -- US consumer sentiment in September reached its lowest level in four months as inflation expectations rose, with the year-ahead outlook hitting the highest since June, final results of a University of Michigan survey showed Friday. The main sentiment index fell 7% sequentially to 48.1 this month, but was higher than the preliminary results of 47.8, according to the survey. "Consumer sentiment ticked down less than four index points in September, reaching the lowest reading in four months and down 15% from January," Surveys of Consumers Director Joanne Hsu said. Year-ahead inflation expectations increased to 4.6% this month from 4% in August, reaching its highest reading since June. The five-year price growth forecast ticked higher to 3.4% from 3.3%, where it was for the last three months, according to the survey. Last week, the Federal Reserve raised its benchmark lending rate for the first time since July 2023 and signaled another hike later this year in a bid to combat elevated inflation. Several monetary policymakers have recently signaled the need for a tighter monetary policy amid persistent price pressures. On Thursday, Philadelphia Fed President Anna Paulson said inflation risks have increased this month due to the Middle East conflict and the surge in artificial intelligence investments. The gauge for current economic conditions decreased to 50.9 in September from 51.9 last month, while the index of consumer expectations slid 10% to 46.3, the University of Michigan survey showed Friday. "Views of current and year-ahead expected personal finances both weakened about 10% this month, with concerns over high prices continuing to climb," Hsu wrote. "Buying conditions for durables improved a bit, in part due to a perception that completing such purchases now would help consumers avoid higher prices in the future." US retail gasoline prices averaged $4.4918 per gallon Friday, compared with $3.1579 a year ago, according to data from AAA, a motoring and leisure travel membership organization that tracks fuel prices in the US. "The short-run outlook for business conditions plunged amid renewed worries that elevated fuel prices and re-escalating trade disputes could pass through to the economy as a whole," Hsu said. Markets are pricing in a 66% probability that the Fed will lift interest rates again by 25 basis points next month, according to the CME FedWatch tool. The remaining odds point to a pause.