High prices and high interest rates continue to weigh! U.S. consumer confidence fell to a five-month low in October, inflation expectations hit their highest level since May.

Title context: High prices and high interest rates continue to weigh! U.S. consumer confidence fell to a five-month low in October, inflation expectations hit their highest level since May. Text: Amid persistently high prices and interest rates, U.S. consumer confidence deteriorated further in October, falling to its lowest level in five months. At the same time, consumers' expectations for future inflation rose, with both short-term and long-term inflation expectations hitting new highs since May, underscoring that inflationary pressures continue to erode the purchasing power of American households. Survey data released by the University of Michigan on Friday showed that the final reading of the U.S. consumer sentiment index fell to 48 in October, down from 48.1 in September. Although the index has weakened for consecutive readings, the final reading improved from the preliminary reading and came in above all economists' forecasts in a Bloomberg survey. On inflation expectations, consumers expect prices to rise 4.7% over the next year, up from 4.6% in September; the average annual inflation expectation for the next five to ten years reached 3.5%. Both indicators rose to their highest levels since May of this year. Joanne Hsu, director of the University of Michigan's Surveys of Consumers, said in a statement that after five consecutive years of inflation above the Federal Reserve's target level, consumers' short-term and long-term inflation expectations have both risen in recent months, suggesting that high inflation expectations may gradually become entrenched and pose a potential risk to the U.S. economy. U.S. consumer confidence remains under pressure, mainly due to factors such as persistently high inflation, weak hiring activity and mortgage rates remaining at high levels. Although U.S. mortgage rates have recently pulled back, overall financing costs remain elevated, continuing to suppress households' demand for home purchases and other large-ticket spending. Meanwhile, U.S. gasoline prices remain significantly above $4 per gallon, further adding to the burden of household living costs. Over the past few months, U.S. price increases have outpaced wage growth, further squeezing households' real purchasing power. Data released last week showed that U.S. consumer prices rose in September at the fastest pace in five months, reflecting the continued inflationary push from higher energy and other living costs. As the U.S. midterm elections enter their final stretch, the cost-of-living issue has also become a core economic topic of voter concern. Hsu noted that regardless of political affiliation, U.S. consumers generally believe that inflation poses a far greater risk to the economy over the next year than unemployment. The survey showed that consumer confidence among both Democratic and Republican supporters improved in October, but confidence among independent voters fell for a third consecutive month, reflecting continued differences in views on the economic outlook among different political groups. Notably, high interest rates are having a more pronounced dampening effect on consumers' willingness to buy large-ticket goods. Data showed that the index of buying conditions for durable goods fell in October to the lowest level on record. The report noted that rising interest rates and heightened consumer concerns about the affordability of goods were the main drivers of the decline. Meanwhile, nearly 70% of surveyed consumers expect interest rates to rise further over the next year, the highest share in more than three years. This result indicates that although the market continues to focus on the Fed's future monetary policy direction, ordinary consumers remain broadly worried that financing costs could rise further, adding to the burden of housing, auto and other large-ticket expenditures. By component, the index measuring consumers' views of current economic conditions fell to its second-lowest level on record, highlighting American households' dissatisfaction with the current economic environment. However, the consumer expectations index, which measures the outlook for the future economy, improved for the first time since July, indicating that although consumers remain pessimistic about current economic conditions, their views on future economic development have shown some signs of stabilization. Overall, the October U.S. consumer confidence data reflect that persistent inflationary pressures and high interest rates remain the main factors affecting households' willingness to spend. Although consumers' expectations for the future economic outlook improved slightly, rising prices, pressure on real incomes and high borrowing costs are still constraining households' spending capacity. Particularly noteworthy is that short-term and long-term inflation expectations rose in tandem, which may further increase the difficulty for the Fed to control inflation. If consumers continue to expect prices to rise rapidly in the future, inflation psychology could gradually become entrenched and affect future consumption decisions and price trends. The University of Michigan consumer survey was conducted from September 22 to October 19.