US consumer sentiment drops as inflation expectations surge

Feb 7 (Reuters) - U.S. consumer sentiment dropped unexpectedly in February to a seven-month low and inflation expectations rocketed as households feared it may be too late to avoid the negative effects on their purchasing power from President Donald Trump's threatened tariffs.

The University of Michigan Surveys of Consumers on Friday said its Consumer Sentiment Index dropped to 67.8 from January's final reading of 71.1, which was also the consensus expectation among economists polled by Reuters.

Meanwhile households saw inflation over the next year surging to 4.3% - the highest since November 2023 - from 3.3% last month. Over the next five years they saw inflation running at 3.3% - the highest since June 2008 - from 3.2% in January.