Prices for everyday goods and services are still climbing — and last month’s jump was the fastest in five months, according to July Consumer Price Index data. That means things like airfare, car repairs, and eating out are costing more for Michigan families.
At the same time, a University of Michigan survey shows people here are feeling just a bit better about the economy than they did earlier this summer.
Airline fares saw the greatest increase in price – up 4% from last month – while other prices dropped… like gas down 2.2% and electricity down just 0.1%.
But while consumer sentiment has ticked upward in June and July, University of Michigan’s Director of Surveys of Consumers Joanne Hsu said her findings align with the Consumer Price Index results.
“ Consumers are broadly feeling still quite negative about the trajectory of the economy,” said Hsu.
“Their views have improved from April and May, but that's because during those months, that's when the reciprocal tariffs were announced and consumers were really bracing for a worst case scenario that hasn't come to pass, but they are still quite worried about the future. They are worried that inflation will re-accelerate and they're very cautious about the future right now.”
From the U-M survey, consumers' expectations of inflation in the year ahead also dropped from 5% last month to 4.5% this month. This is the lowest expectation of inflation since February but still above pre-election expectations in December.
Some of the drop in inflation expectations appears tied to the fact that prices haven’t surged after temporary delays and reductions to Trump administration tariffs announced earlier this year — including those on Chinese goods in May and again this week.
Hsu said tariffs are starting to affect prices on imported goods, but so far their full effects have been blunted by businesses holding back on making big changes (and raising prices) until tariff policies are finalized.
“ Companies have limited ability to eat costs,” said Hsu. “They can't eat costs forever.”
“In the short term, it is very likely that companies will have to either be willing to take a loss for who knows how long, or to pass through those prices back to consumers. But consumers seem less likely to be willing to swallow price increases now than they would've been a few years ago.”
While the U-M survey also found that perceptions of the economy in July were similar across party lines – Republicans, Independents, and Democrats all reporting slight upticks in sentiment – overall views still remain largely negative.
