Americans are growing optimistic about inflation

Washington, DC
CNN
 — 

With inflation continuing to slow, US consumers are taking notice — and they’re feeling a little more optimistic.

Consumer sentiment tracked by the University of Michigan improved in June, according to a final reading, up 9% from May. That was largely due to inflation’s steady retreat in recent months and consumers feeling more cheery about the economy’s future.

The Commerce Department reported Friday that the Personal Consumer Expenditures price index, the Federal Reserve’s preferred inflation gauge, rose 3.8% in May from a year earlier, down from April’s 4.3% annual rise.

Meanwhile, consumers’ economic outlook for the year ahead jumped 28% over last month.

“Overall, this striking upswing reflects a recovery in attitudes generated by the early-month resolution of the debt ceiling crisis, along with more positive feelings over softening inflation,” said Joanne Hsu, director of the university’s Surveys of Consumers, in a release Friday.

Consumers’ expectation for inflation in the year ahead also receded, falling to 3.3% in June from 4.2% in May. The optimism reflected in the survey means US consumers have faith that inflation will eventually slow to a sustainable level, which the Fed defines as 2% inflation.

This story is developing and will be updated.