A report from the University of Michigan revealed on Friday the preliminary reading for the Reuters/Michigan index of consumer sentiment plunged 5.5 percent m-o-m to 80.8 in early July. This was the lowest reading since February.

Economists had expected the index would increase to 86.5 this month from June’s final reading of 85.5.

According to the report, the index of current U.S. economic conditions declined 4.6 percent m-o-m to 84.5 in July from 88.6 in the previous month. Meanwhile, the index of consumer expectations tumbled 6.1 percent m-o-m to 78.4 this month from 83.5 in June.

According to Surveys of Consumers chief economist, Richard Curtin, the July drop in consumer sentiment was largely due to less favorable prospects for the U.S. economy. “This decline was caused by a misjudgement by consumers in the pace that the economy would recover as the pandemic eased,” he said. “This involved both underestimating the economy's ability to reactivate supply lines and restore jobs, and the resulting impact on inflation. Rather than job creation, halting and reversing an accelerating inflation rate has now become a top concern.”