Learning Center

Confident Consumers Face Rising Prices

Confident Consumers Face Rising Prices

Separate reports show that consumer sentiment rose significantly in the first week of June while prices at the producer level rose during the month of May after months of decline.

The University of Michigan’s consumer sentiment index rose from 90.7 in May to 94.6 in early June, the first increase in three months (in light of recently rising gasoline and other energy prices, economists had expected the June figure to register 91.2). The gain was attributed to several factors: the most favorable personal financial prospects in eight years, the largest wage gain expectations in seven years and an expectation by consumers that the inflation rate will remain low over the foreseeable future. These are all factors which bode well for both individuals with good credit and those who would like to obtain good credit.

The United States Labor Department indicated that its producer price index (PPI) increased 0.5 % in May, following a 0.4% decline in April. This was the largest gain since September, 2012. For the previous year through May, the PPI was down by 1.1%, the fourth straight twelve-month decline. However, gasoline prices were up by 17% in May, the largest gain in nearly six years. Food prices rose 0.8%, the biggest gain in more than a year, after five straight monthly drops.

(The University of Michigan’s consumer sentiment index is a monthly measure based on a fifty-question telephone survey of at least 500 individuals in the 48 contiguous states. The PPI is a government measure using data collected through a systematic voluntary sampling of producers in manufacturing, mining, and service industries.)

Newsletter Signup

Subscribe to our newsletter to receive news, updates, and other important information by email.