Consumer sentiment plummets as inflation fears surge

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A customer shops in a grocery store on March 11, 2026 in Miami, Florida. According to the Bureau of Labor Statistics data that was released the consumer price index increased seasonally adjusted 0.3% for the month, putting the 12-month inflation rat

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The Iran war weighed heavily on the minds of consumers last month when they were asked about their expectations for the economy, a new University of Michigan study found.

By the numbers:

In just a month, consumer sentiment sank approximately 11 percent to a measure of 47.6 and now sits nine percent lower than last year, researchers determined. The survey report noted that the decline began with the start of the Iran conflict. Consumers’ feelings about their own finances slid around 11 percent, as they worried about higher prices and weaker asset values.

What they're saying:

"Demographic groups across age, income, and political party all posted setbacks in sentiment, as did every component of the index, reflecting the widespread nature of this month’s fall," the report indicated.

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Big picture view:

When given the opportunity to offer open-ended comments, respondents blamed the Iran war for the growing pessimism, researchers explained. They noted that 98 percent of interviews were completed prior to the April 7 ceasefire.

Researchers added that they expect sentiment to rebound as consumers regain confidence that supply chain issues from the war are over and soaring gas prices have settled down.

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Big jump in inflation fears

What's next:

Consumers also predicted prices next year would be 4.8 percent higher than they currently are, a full percentage point higher than last month. It was the largest jump since April 2025, and well ahead of the 2.3-3.0 percent inflation expectations in the two years leading up to the pandemic.