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June Consumer Sentiment Hits 10-Month Low: University of Michigan

U.S. consumer sentiment dropped unexpectedly sharply in June to its weakest in 10 months, as higher gasoline prices dampened consumers' mood.

The Reuters/University of Michigan Surveys of Consumers said the preliminary reading on the June consumer sentiment index showed a decline to 83.7 from 88.3 at the end of May.

The decline was much sharper than predicted by economists, who had forecast a median reading of 88.0 in a Reuters poll.

The decline was "hardly surprising", the survey said, however, noting that U.S. gasoline prices have topped $3 per gallon for six straight weeks.

The survey's gauge of current consumer conditions was 100.2 in June versus a May reading of 105.1, while its final measure on consumer expectations was 73.0 versus 77.6 at end-May.

Its one-year inflation index edged up to 3.5 percent, the highest in 10 months, from 3.3 in late May. The five-year index, however, edged down to 3.0 percent from 3.1 percent.

The survey said that although 1-year inflation expectations had edged up, "the data still indicate that consumers do not anticipate an escalating core inflation rate."

The Reuters/University of Michigan Surveys of Consumers, a monthly series of data on U.S. consumer sentiment, are produced by the University of Michigan in Ann Arbor, Michigan. From January 2007, Reuters has exclusive rights to distribute the data.