Inflation fears lower consumer sentiment

U.S. consumer confidence slipped in April to its lowest since last August, according to a report Tuesday that offered more evidence of a weakening economy.

The Conference Board said its index of consumer sentiment fell to 104.0 from the upwardly revised 108.2 in March. The median forecast of economists polled by Reuters was for the confidence index to come in at 105.0, down from an originally reported 107.2 in March.

The report was released on the same day that the National Assn. of Realtors said March existing-home sales dropped more sharply than in any month since January 1989.

Signs that wage inflation and consumers’ inflation expectations are rising may deter the U.S. central bank from cutting its 5.25% federal funds target rate for many months, even in the face of a softening economy, some economists expect.

“Rising prices at the gas pump continue to play a key role in dampening consumers’ short-term expectations. The decline in the present situation index -- the first decline in six months -- warrants monitoring in the months ahead, as further declines would suggest a softening in growth,” Lynn Franco, director of the New York-based Conference Board Consumer Research Center, said in a news release.

Consumers’ assessment of current conditions slipped. The present situation index fell to 131.3 in April from 138.5 in March, the first fall in six months. The expectations index declined to 85.8 from 87.9.

Inflation expectations rose to the highest since August. Consumers’ expectations for the inflation rate 12 months from now rose to 5.2% from 4.9% in March.

Views of labor market conditions slipped in the survey. Consumers who said jobs were “plentiful” fell to 27.8% from 30.3%, while those who said jobs were “hard to get” rose to 20.4% from 18.9%.