(Bloomberg) -- US consumer sentiment unexpectedly fell to a seven-month low in early June as high prices continued to take a toll on views of personal finances.

The sentiment index dropped to 65.6 in June from 69.1, according to the preliminary reading from the University of Michigan. The median estimate in a Bloomberg survey of economists called for the measure to rise to 72.

Consumers expect prices will climb at an annual rate of 3.1% over the next five to 10 years, up slightly from the 3% expected in May, the data out Friday showed. They see costs rising 3.3% over the next year, the same as in the previous month.

A gauge of consumers’ current assessments of their personal finances slid 12 points to 79, the lowest since October and also reflecting concerns about incomes. Views about economic conditions dropped to the weakest since end of 2022.

The decline in sentiment coincides with signs that the labor market, which has driven consumer spending over the last year, is softening. The unemployment rate rose to 4% last month, the highest in more than two years, government data showed.

“While lower-income families have, as a group, seen notable wage gains in a strong labor market, their budgets remain tight amid continued high prices even as inflation has slowed,” Joanne Hsu, director of the survey, said in a statement.

“The views of middle-income consumers resemble those of their lower-income counterparts, a departure from historical patterns in which their mentions are squarely in between those of higher- and lower-income consumers,” Hsu said.

The slide in sentiment suggests restrained consumer demand in coming months. The university’s measure of buying conditions for durable goods decreased to the lowest level since December 2022.

What Bloomberg Economics Says...

“A common theme in the latest economic data and anecdotes has been consumer push back against price hikes — something that added to disinflation across broad swathe of both goods and services in May.”

— Eliza Winger

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A measure of consumer expectations also fell, to the lowest this year.

--With assistance from Chris Middleton.

(Adds comment from Bloomberg Economics)

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