2017.11.1221:48:00UTC+00U.S. Consumer Sentiment Cools in November

A gauge of U.S. consumer sentiment unexpectedly declined by the most in a year in November amid bets that inflation and interest rates will grow, a report released by the University of Michigan showed on Friday.

The preliminary reading for the sentiment index came in at 97.8, lower than the expected 100.8 by economists and the prior month's 100.7, which was the highest reading since January 2004.

The current conditions guage, which shows the outlook of Americans towards their finances, declined to 113.6 from 116.5. A separate measure of expectations also fell to 87.6 from 90.5.

Consumers project inflation rate to hit 2.6 percent in the next year, higher compared to 2.4 percent last month. Meanwhile, annual income gain is seen to be at 2.1 percent for the second straight month.

Despite the drop in the confidence gauge, sentiment remains at the second-highest level since January, solidifying other reports that Americans remain positive regarding employment and the economy.

Expectations of a rise in inflation and another interest rate hike before the year ends affected the indicator, despite a high portion of Americans mentioning an improving jobs market spontaneously.

The published data shows consumers are pricing in whether income growth would be sufficient to outstrip the anticipated rise in lending costs for home and automobile purchases, the report said.