Consumer sentiment hits record low, inflation fears rise amid Iran war

Consumer confidence plunged to a record low in April as fears mounted over rising energy prices and the broader impact of the Iran war, according to a University of Michigan survey Friday.

The university’s headline index of consumer sentiment tumbled to 47.6, down 10.7% from the March survey to its lowest on record. Current conditions and expectations indexes also saw double-digit monthly declines.

The drop in sentiment coincided with a sharp spike in inflation expectations, with respondents seeing prices up 4.8% in a year from now, a full percentage point rise from the March reading to its highest since August 2025. The one-year outlook in April 2025 was 6.5% following President Donald Trump’s “liberation day” tariff announcement.

Survey comments “show that many consumers blame the Iran conflict for unfavorable changes to the economy,” said the survey’s director, Joanne Hsu.

However, Hsu also noted that most of the interviews were completed before the April 7 ceasefire. The survey, then, primarily reflects conditions from March.

“Economic expectations will likely improve after consumers gain confidence that the supply disruptions stemming from the Iran conflict have ended and gas prices have moderated,” she said.

The survey release came shortly after the Bureau of Labor Statistics reported that its all-items consumer price index rose 0.9% in March, pushing the 12-month inflation rate to 3.3%. BLS officials said most of the increase in the headline number came from the surge in energy prices, with food inflation little changed.

Inflation expectations at the five-year window in the University of Michigan survey moved higher as well, to 3.4%, a 0.2 percentage point monthly increase though a percentage point below the level of a year ago.

Clarification: The first version of the survey is released in April but largely covers conditions in March. An earlier version did not make that point clearly.