US consumer sentiment highest since February on brief oil price dip

US consumer sentiment this month jumped to its highest since February on a temporary drop in oil prices, University of Michigan data showed Friday -- but renewed hostilities in the Middle East could reverse this progress.

Preliminary data showed the university's consumer sentiment index came in at 54.4 points in July, up nearly 10 percent from June's reading.

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The bullish outlook came after energy prices fell in June on hopes of a longer term ceasefire between the United States and Iran, after both sides struck an initial deal.

But fighting has since resumed, with US President Donald Trump declaring the ceasefire over and oil prices rising again.

"Upward momentum may prove difficult to sustain if recent declines in gas prices continue to reverse course," said Joanne Hsu, director of the University of Michigan survey.

She noted that interviews for the July release were conducted between June 23 and July 13, with over 70 percent completed before the United States resumed strikes against Iran on July 7.

"With prices remaining frustratingly high, consumers are hardly ebullient about the economy," Hsu added.

Sentiment is down 12 percent from a year ago, she said.

US-Israel strikes targeting Iran since late February have plunged the Middle East into war.

This has sent global energy prices rocketing as Tehran retaliated by virtually closing off the Strait of Hormuz, a key waterway for energy transit.

Higher costs have been flowing through the world's biggest economy, as gasoline prices rose in turn.

While the current average price of regular gasoline is $3.98 per gallon, it remains notably higher than the $3.16 per gallon average seen a year ago.

Year-ahead inflation expectations edged down to 4.2 percent in July from 4.6 percent in June, but this is still elevated as well, Hsu said.