Inflation, job losses keep US consumers glum

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NEW YORK, June 28 (Reuters): Consumer confidence fell more than expected in June, hitting another 28-year low as surging prices and mounting job losses contributed to a bleak outlook, according to a survey released Friday.

The news agency/University of Michigan surveys of consumers said five-year inflation expectations remained steady at the peak of 3.4 per cent reached in May, which was the highest in 13 years.

Federal Reserve officials have focused on long-term inflation expectations and the persistence of such pressures heightens their dilemma-whether to fight price growth or support a weak economy in the grips of the worst housing slump since the depression of the 1930s.

The surveys of consumers said the final June reading for its index of confidence fell to 56.4 from May's 59.8. The report said the pace of consumer spending is likely to sink at least through the start of 2009.

"Moreover, gas prices have risen to an all-time peak, food prices posted the largest increases in decades, home prices have fallen faster than any time since the great depression, and there has been widespread distress associated with foreclosures," the report added.

Also weighing on consumers, data earlier this month showed US employers shed jobs for a fifth straight month in May and the unemployment rate jumped to 5.5 per cent, its highest in more than 3-1/2 years.

Economists had expected a reading of 57.0, according to a poll. Their forecasts ranged from 55.9 to 60.0. The final June result is slightly below the preliminary figure of 56.7 released on June 13.

"Overall, no new information, only confirmation of prevailing weak sentiment," analysts at RBS Greenwich Capital said in a note to clients about the report.