US consumer confidence unexpectedly declined in July, reflecting a deterioration in Americans' views of current business conditions and the job market, highlighting that persistent inflation and cost-of-living pressures continue to weigh on consumer sentiment.

The Conference Board reported Tuesday that the consumer confidence index fell 1.4 points to 90.8 in July, following a revised reading of 92.2 in June, below the median estimate of 92.4 from economists surveyed by the media.

Sub-index data showed that the present situation index, which measures current business and employment conditions, dropped to its lowest level since 2021, while the expectations index, which reflects the six-month outlook, was essentially unchanged.

Analysts believe that persistently high gasoline and food prices are significant factors dragging down consumer confidence, underscoring how inflationary pressures and rising living costs continue to burden US households. Meanwhile, after a relatively strong spring in job growth, the US labor market is beginning to show signs of cooling.

The survey indicated that the share of consumers saying "jobs are plentiful" in July fell to 24.6%, while the share saying "jobs are hard to get" also edged lower. However, the gap between the two narrowed further to its tightest level since 2021, suggesting that job seekers still face a relatively challenging employment environment.

The survey was conducted between July 1 and 22, a period when US gasoline prices briefly fell to their lowest level since March before rebounding due to rising international oil prices sparked by escalating US-Iran tensions. However, market sentiment eased after the US paused military operations over the weekend, leading oil prices to retreat again.

The survey showed that while consumer mentions of gasoline prices have decreased, they remain at a relatively high level; meanwhile, discussions about rising grocery prices have increased.

Looking ahead, consumers have grown more pessimistic about business conditions in the coming months but are slightly more optimistic about the job market outlook. Despite ongoing concerns about living costs and the labor market, US consumer spending continues to show resilience.

Data showed that US retail sales rose for the fifth consecutive month in June, and economists generally expect consumer spending to remain a key driver of economic growth in the second quarter. Economist Eliza Winger noted, "The slight decline in consumer confidence in July mainly reflects the impact of rising gasoline prices and renewed geopolitical tensions, but consumers have not yet significantly adjusted their spending plans."

The survey also found that US consumers still plan to increase spending on big-ticket items and services such as dining out over the next six months, and travel intentions have also recovered. Additionally, inflation expectations for the year ahead have eased, though most respondents still anticipate further interest rate increases over the next 12 months.

Notably, the US Commerce Department will release its first estimate of second-quarter gross domestic product (GDP) on Thursday, along with data on June consumer spending, personal income, and inflation, which markets will use to further assess the outlook for the US economy and Federal Reserve monetary policy.

Separately, the University of Michigan previously reported that its consumer sentiment index rose to a five-month high in July, although most of that survey was conducted before the US launched military action against Iran earlier this month, leading to some divergence with the Conference Board's findings.