Consumer confidence at the University of Michigan has fallen to a three-month low as concerns about the potential for the Iran war to drive up gasoline prices have intensified in recent weeks.

According to the latest survey data released by the University of Michigan, the consumer confidence index dropped from 56.6 in February to 55.5 in early March. The survey was conducted from February 17 to March 9. The median forecast from economists surveyed by the media was 54.8, with the previous value being 56.6.

In terms of important sub-indices, the current conditions index rose to 57.8, a five-month high; while the expectations index fell to its lowest level since November of last year.

Regarding inflation expectations, consumers anticipate that prices will rise by 3.4% over the next year, unchanged from last month, with a forecast of 3.7%; while the average annual inflation expectation for the next 5 to 10 years is 3.2%, slightly down from last month's 3.3%, with a forecast of 3.4%.

Looking ahead, consumer confidence may come under further pressure amid the potential for rising fuel prices due to the conflict between the U.S. and Iran, especially as the American public has already expressed dissatisfaction with high living costs. Additionally, the still-weak U.S. labor market may further undermine confidence, as evidenced by the weak employment report in February.

Another report released on Friday showed that the Fed's preferred core inflation measure rose by 0.4% in January, a figure that does not yet reflect the impact of the Middle East conflict.

For Federal Reserve officials, who are widely expected to keep interest rates unchanged at next week's FOMC meeting, the uncertainty surrounding the inflation outlook may limit the scope for rate cuts in the coming months.

Joanne Hsu, head of the Michigan consumer survey, stated:

Interviews conducted before military action against Iran showed that consumer confidence had improved compared to last month, but the decline in data over the following nine days completely erased those gains.

Following airstrikes against Iran, market concerns about rising gasoline prices intensified, pushing expectations for gasoline prices over the next year to their highest level since 2022. In the future, if the global energy market tightens further, it will create greater upward pressure on gasoline price expectations and may push overall inflation expectations higher.

Consumers' views on their own financial situations and the overall outlook for the U.S. economy have both deteriorated