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US consumer sentiment improved in early August to its highest in three months as sales at retailers and low mortgage rates spurred Americans to boost their buying plans, a survey released on Friday showed.
But concerns about rising food prices caused a jump in both short- and long-term inflation expectations, the Thomson Reuters/University of Michigan consumer sentiment survey showed.
The preliminary reading on the index on consumer sentiment rose to its highest level since May at 73.6 from 72.3 last month, topping economists' forecasts for a slight uptick to 72.4.
Americans were also more optimistic about the state of the economy with the measure of current economic conditions rising to its highest level since January 2008 at 87.6 from 82.7.
Purchasing plans were bolstered by cheap prices and the measure of buying conditions for household durables rose to 140 from 130.
“Consumers are feeling a little better about the current economy, though a little more concerned about the outlook,” said Gary Thayer, chief macro strategist at Wells Fargo Advisors in St. Louis, Missouri.
Consumer expectations cooled and the majority of households expected no income increase during the year ahead. The expectations index slipped to 64.5 from 65.6, the lowest level since December.
Growth in personal spending is likely to be just under 2 percent into early next year, said survey director Richard Curtin.
The one-year inflation expectation rose to the highest level since March at 3.6 percent from 3.0 percent as consumers worried about the impact a drought in the US Midwest could have on food prices.
The five-to-10-year inflation outlook also gained to 3.0 percent from 2.7 percent.
US stocks remained little changed immediately after the data, while the dollar hit a session high against the yen.
Separate data showed a gauge of future US economic activity improved in July on a drop in new claims for jobless benefits and an increase in housing permits. Still, the reading pointed to sluggish growth ahead.
The Conference Board said its Leading Economic Index climbed 0.4 percent to 95.8, reversing a 0.4 percent decline in June. - Reuters