Consumer sentiment weakened further in October amid higher expectations for inflation, according to preliminary survey findings from the University of Michigan.

The university’s Index of Consumer Sentiment fell 3.7% in October to 46.3, within spitting distance of its record low of 44.8 in May.

Gloomier views on current economic conditions drove most of the decline, though the survey registered a slight uptick in consumers’ forward-looking outlooks. But the increase came with a catch.

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“While year-ahead expectations for personal finances and business conditions crept up slightly, buying conditions for durables plummeted amid high prices and borrowing costs,” commented Joanne Hsu, director of surveys of consumers at the university.

Accelerating inflation since the ongoing Iran war began in late February has steadily weakened consumer sentiment over the course of 2026, though top-line indicators of U.S. economic health point to resilient growth amid a range of pressures.

Massive investments in artificial intelligence have simultaneously raised labor market concerns among workers while concentrating gross domestic output within a narrow slice of the country’s overall economic pie.

The Federal Reserve raised its benchmark interest rate in mid-September for the first time in three years to combat a range of inflationary pressures, and policymakers have repeatedly said since then that more rate hikes are in the pipeline.

Rate hikes work to ease inflation by raising borrowing costs for consumers and businesses, thereby slowing spending, economic growth and, the thinking goes, price increases.

“Frustration over cost of living continues to mount,” added Hsu, “as consumers across the political spectrum believe that the trajectory of the economy has weakened since the beginning of the year.”

That frustration was observed in October’s preliminary survey findings through inflation expectations that rose for the “second straight month to their highest readings since May.”

An addendum report accompanying the survey results identified Trump administration tariffs and higher gasoline costs as the primary drivers of consumers’ rising inflation expectations in 2026. Only roughly 3 in 10 consumers “expect to spend as usual in the year ahead on items that have large price increases,” the report said.