US consumer sentiment improved in July, with the University of Michigan index rising from 60.7 to 61.8 — the highest reading since February. The gains were broad-based, as both Current Conditions Index and Expectations Index ticked up to 66.8 and 58.6 respectively.
Inflation expectations, however, showed a more meaningful shift. Year-ahead inflation expectations dropped sharply from 5.0% to 4.4%. Long-run expectations declined for a third straight month to from 4.0% to 3.6%. Although these are the lowest readings since February, both remain well above the levels seen at the end of 2024, reflecting continued concern about future price pressures.
