US consumer sentiment has dropped sharply in August, new data shows, ending months of recent gains as prolonged inflation and uncertainty over the US war against Iran hit the economy, AFP reports.

“Consumer sentiment fell about eight per cent this August, ending two consecutive months of improvement,” says University of Michigan survey director Joanne Hsu.

Preliminary data shows consumer sentiment at 51.0 points, down from 55.2 and well off from market expectations.

Expectations for inflation in the year ahead have ticked up from 4.2pc in July to 4.3pc in August, the survey shows.

“The current reading substantially exceeds the 3.4pc seen in February before the Iran conflict began, along with all 2024 readings,” says Hsu.