Consumer sentiment, which was at a low in the US in June, has started to pick up in recent weeks as gasoline prices have fallen and decade-long inflation appears to be easing.
However, as confidence returns, Americans are making small changes – such as buying meat in bulk or shifting more shopping to discount chains – suggesting that many families are learning to cope with higher prices.
Although consumer sentiment is still quite low by historical standards, we are starting to see an improvement
– said Joanne W. Hsu, economist and director of consumer surveys at the University of Michigan. She added that this is largely driven by slowing inflation, particularly the decline in gasoline prices.
25 per cent price drop
The revival in consumer confidence is particularly good news for the White House, which has been criticised for not doing enough to tackle inflation. Gasoline prices, which peaked at more than $5 a gallon in June at $3.8 a gallon, have fallen to $3.74 nationwide. This 25 percent price drop is significant for many Americans, especially those in lower-income households where gasoline costs account for a larger share of weekly spending.
Overall inflation, meanwhile, eased slightly – prices were unchanged in July, though still 8.5 percent higher than a year ago – thanks to Federal Reserve interest rate hikes.
Even so, the impact on both wallets and consumer sentiment has been swift, the Washington Post reports. Business conditions, the short-term financial outlook and spending plans improved in August, according to key Conference Board gauges. Consumer confidence rose this month after three consecutive months of declines, and the number of Americans reporting holiday plans hit an eight-month high.