Consumer outlook plunges in September as inflation outlook worsens

Consumer sentiment plunged in September amid heightened inflation fears, hitting its second-lowest level on record in the University of Michigan's monthly survey released Friday.

The survey's headline index hit a level of 47.8, down 7.5% from the August reading and off 13.2% from a year ago. This was the second-lowest reading on record for data going back to 1952 — the bottom coming in May as rising prices also jolted the outlook.

"Year-ahead expectations for both personal finances and business conditions plunged," Joanne Hsu, survey director, said. "With a resurgence in fuel prices and trade tensions, consumers anticipate greater pressures on their pocketbooks to come."

Indeed, the one-year inflation outlook surged to 4.6%, up 0.6 percentage point from the prior level and the highest since hitting the same level in June.

The current conditions index in the survey fell 1.9% from the prior month, while the expectations measure tumbled 11.1%.

Bureau of Labor Statistics data also out Friday showed gasoline prices rose 3.9% in August and were up 27.4% from a year ago. Fuel oil prices soared 10.1% and were up 52% annually.

Traders now see a Federal Reserve rate hike next week as a near certainty, with odds rising past 85% Friday after the BLS released its consumer price index showing inflation at 3.4% annually, far above the central bank's 2% target.