(Bloomberg) -- US consumer sentiment rose to the highest since April, while year-ahead inflation expectations picked up to a five-month high as Democrats saw a greater risk of price pressures from anticipated tariffs.
The preliminary December sentiment index climbed to 74 from 71.8, according to the University of Michigan. The survey period includes responses from Nov. 19 to Dec. 2. The median estimate in a Bloomberg survey of economists called for a reading of 73.2.
Consumers expect prices to rise at an annual rate of 2.9% over the next year, data Friday showed. And they saw costs rising at an annual rate of 3.1% over the next five to 10 years, compared with 3.2% in the prior month.
Consumer sentiment in the preliminary survey continued to reflect the recent shift based on political ideologies after the November election.
A gauge of sentiment among Republicans now stands at a four-year high following President-elect Donald Trump’s win, while confidence among Democrats has dropped to a more than two-year low. Among political independents, sentiment rose to an eight-month high.
“Throughout this month’s interviews, Democrats voiced concerns that anticipated policy changes, particularly tariff hikes, would lead to a resurgence in inflation,” Joanne Hsu, director of the survey, said in a statement. “Republicans disagreed; they expect the next president will usher in an immense slowdown in inflation.”
Economists have warned that some of Trump’s policies, including his proposals on tariffs, could cause higher inflation. In anticipation of higher prices, consumers viewed current buying conditions for durable goods as the most favorable since April 2021, according to the report.
One quarter of respondents spontaneously reported that buying big-ticket merchandise now would avoid higher prices in the future. That helped drive a gain in the university’s measure of current conditions.
The current conditions gauge surged nearly 14 points to 77.7. At the same time, the expectations index fell 5.3 points to 71.6.
Consumers’ outlook for their personal finances fell to a five-month low in December.
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