US Consumer Sentiment Dips Amid Trade War Concerns

Consumer sentiment in the US saw its fifth consecutive decline in May, driven largely by concerns over President Trump's trade policies and potential inflation. The University of Michigan's index experienced a 2.7% drop, nearing its second-lowest reading. Consumers' expectations of rising inflation may hinder the Federal Reserve's plans.

US consumer sentiment took a downward turn in May for the fifth straight month, confounding economists. Americans are growing increasingly concerned that President Donald Trump's trade policies will exacerbate inflation, according to the University of Michigan's latest consumer sentiment index.

The closely-followed index dropped by 2.7% to 50.8, its second-lowest mark in the nearly 75-year history of the survey. The Trump administration's hefty import duties have led to a pessimistic economic outlook, threatening growth and increasing prices despite some recent easing on tariffs.

As US consumers brace for inflation expectations of 7.3% over the next year, the rising sentiment is closely watched by the Federal Reserve. These inflation worries could potentially influence the Fed's future interest rate decisions, as higher consumer expectations may become self-fulfilling.

(With inputs from agencies.)