Consumer confidence is on the rise following three straight months of declines. The good news is attributed chiefly to declining gas prices and an inflation rate that seems to have moderated. Still, analysts say that while a boost in confidence may increase consumer spending, inflation and rate hikes still threaten economic growth.
The Conference Board announced that its consumer confidence index rose to 103.2 in August, up from 95.3 in July. The group’s present situation index rose to 145.4 from 139.7 in July, the first increase since March. The expectations index also increased, from 65.6 in July to 75.1 in August.
According to analysts surveyed by data provider FactSet, consumer confidence was projected to rise along with falling gas prices. According to AAA Motor Club, the average price for a gallon of gas in the U.S. was $3.85 on Tuesday, compared to the more than $5 per gallon consumers saw in June.
Inflation seems to have moderated slightly, but that hasn’t dropped the prices consumers see for essentials such as food, gas, and rent. Consumer prices in July were 8.5% higher than the previous year and down from a 9.1% year-over-year increase in June. The inflation rate between June and July was almost unchanged for the first time in over 25 months of consecutive increases.
The Federal Reserve has upped its pace of rate increases to the highest level in decades to try to curb the record-setting inflation rate. The central bank lifted its benchmark rate by two percentage points in just four meetings, to a range of 2.2% to 2.5%.
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