The University of Michigan’s consumer sentiment index, which measures how American consumers view prospects for their finances and the general economy, fell to 66.8, the lowest in 10 years, from 71.7 last month—a drop that a chief economist for the index said Friday was caused by increasing prices of goods and services and a lack of policies that consumers believe could address the skyrocketing inflation.
Economists surveyed by Bloomberg had expected the index to rise to 72.5 in November.
One in four consumers said inflation led to a reduced standard of living as the price of beef and fuel oil surged 20.1% and 59.3%, respectively, in October over the past year, according to a statement released with the report.
The reduced living standard had the greatest impact on lower-income Americans and older consumers, Richard Curtin, chief economist who worked on the survey, said in the statement.
Half of American families anticipated bringing home smaller incomes after adjusting for inflation next year, Curtin said.
Curtin added the decade-low consumer sentiment was due to “an escalating inflation rate” and a growing belief among consumers that “no effective” policies have been put in place to reverse the trend.
The preliminary index comes as consumer prices rose 6.2% in October compared to the same month last year, marking the fastest annual pace in 30 years, according to the Bureau of Labor Statistics.
“Partisans aligned with the President’s party have adopted very positive moods, and those in the opposing camp very negative moods,” Curtin said. He added, the division along party lines encourages lawmakers to prioritize achieving their policies over providing effective measures to address high inflation.
In October, the price of meat, poultry, fish and eggs rose 11.9% over the past year — the fastest annual increase since December 1990, the Bureau of Labor Statistics said. Beef prices surged 20.1% and pork up 14.1%, while the energy index spiked 30% and the price of used cars and trucks climbed 26.4%. In response to the CPI data, President Joe Biden said in a statement Wednesday that reversing the trend was a “top priority” for him.