Anabelle Colaco
28 Apr 2026

WASHINGTON, D.C.: U.S. consumer confidence fell to its lowest level on record in April, as rising energy costs linked to the Iran war continued to weigh on household sentiment despite a ceasefire.

The University of Michigan's Surveys of Consumers said its Consumer Sentiment Index dropped to a final reading of 49.8, down from 53.3 in March. Although slightly higher than the preliminary reading of 47.6 earlier in the month, the figure still marked the weakest level on record and came in above economists' expectations of 48.0.

The decline was broad-based, affecting consumers across political affiliations and income groups, including those with stock market investments.

Economists say the slump reflects persistent concerns about inflation, driven largely by disruptions to global energy supplies. The conflict in Iran has restricted shipping through the Strait of Hormuz, pushing up oil prices and, in turn, raising the cost of gasoline, diesel, and other goods.

"The Iran conflict appears to influence consumer views primarily through shocks to gasoline and potentially other prices," said Joanne Hsu, director of the Surveys of Consumers. "In contrast, military and diplomatic developments that do not lift supply constraints or lower energy prices are unlikely to buoy consumers."

Fuel costs have surged in recent weeks, with the national average gasoline price remaining above US$4 per gallon and diesel prices exceeding $5, according to government data.

A Reuters/Ipsos poll released Friday showed that a majority of Americans blame President Donald Trump for the rise in gasoline prices. This trend could weigh on the Republican Party ahead of congressional midterm elections.

Higher diesel prices are also expected to feed into broader inflation, as transportation costs increase for goods ranging from food to consumer products.

Economists warn that rising prices are likely to hit lower- and middle-income households hardest, as they spend a larger share of their income on fuel.

"We expect the hit to real disposable income growth from higher gas prices will slow consumption growth," said Grace Zwemmer, a U.S. economist at Oxford Economics.

Inflation expectations also climbed sharply. The survey's measure of expected inflation over the next year rose to 4.7 percent in April from 3.8 percent in March, while the five-year outlook increased to 3.5 percent from 3.2 percent.

These levels are significantly higher than those seen before the COVID-19 pandemic and suggest that inflation concerns are becoming more entrenched.

Additional data from S&P Global showed that prices charged by businesses rose to their highest level in nearly four years in April, reinforcing expectations that the Federal Reserve may hold off on cutting interest rates this year.

"More pain will come as higher transportation costs are passed along for food, appliances, toys, and every other item that travels on a ship, car, or plane," said Heather Long, chief economist at Navy Federal Credit Union. "Sentiment won't improve until the Strait of Hormuz is open, and there is a permanent end to the conflict."