U.S. consumer confidence declined for the first time in three months in August, with the one-year inflation expectation rising to 4.3%.

U.S. consumer confidence declined in August for the first time in three months, as households grew increasingly worried about the deteriorating business environment and rising prices, leading to a weakened outlook for the short-term and long-term prospects of the U.S. economy. Preliminary data released by the University of Michigan on Friday showed that the consumer confidence index fell to 51 in August, down from a final value of 55.2 in July, and significantly below the economists' expectations of 55 based on media surveys. The survey indicated that concerns about inflation among American consumers have intensified. Respondents expected prices to rise by 4.3% in the coming year, a slight increase from the previous month, and notably higher than the levels prior to the outbreak of the conflict in Iran in February of this year. The average annual inflation expectation for the next 5 to 10 years was reported at 3.3%. Joanne Hsu, director of the consumer survey at the University of Michigan, stated that the decline in consumer confidence in early August was widespread across different demographic groups, particularly evident among older consumers, low-income groups, and those without a university degree. These groups are more susceptible to the erosion of purchasing power due to inflation. At the same time, consumer confidence in both short-term and long-term economic prospects has worsened, reversing the improving trend seen over the previous two months. In contrast, expectations regarding the job market have remained relatively stable since the beginning of the year. The survey showed that households are increasingly concerned about inflation, while attention to unemployment issues has somewhat diminished. The survey covered the period from July 28 to August 10, during which the national average gasoline price in the U.S. remained above $4 per gallon. Higher energy prices have further increased the cost of living pressures on households. Another report released the same day indicated that U.S. retail sales fell to their largest drop in over a year in July, primarily due to decreased spending on automobiles and online shopping, showing that, against the backdrop of high prices and sluggish income growth, consumers have started to cut back on some expenditures. American residents are currently facing the dual pressure of rising prices and stagnant wage growth. Government data released earlier this week showed that real average hourly wages fell by 0.2% year-on-year in July, continuing the weak performance since the outbreak of the war in Iran in February of this year. Consumer spending has been a crucial force supporting U.S. economic growth; therefore, declines in confidence, weak real wages, and weakening retail sales may further raise concerns in the market about cooling consumption momentum. Meanwhile, the rise in one-year inflation expectations to 4.3% indicates that the Federal Reserve still faces a complex policy trade-off between economic growth and inflation risks.