The University of Michigan’s Consumer Sentiment Index plunged to a record low of 44.8 in May 2026, revised down from a preliminary 48.2 and marking the third straight monthly decline, as Strait of Hormuz supply disruptions continued to push gasoline prices higher. The cost of living remained the top concern, with 57% of consumers spontaneously citing high prices as eroding their personal finances. Lower-income consumers and those without college degrees posted the steepest declines, as these groups are more sensitive to rising gas and essentials costs. Politically, Independents and Republicans saw sentiment fall to the lowest levels of the current administration, while Democrats’ sentiment showed little change. Critically, consumers grew increasingly worried that inflation would spread beyond fuel prices in the long term. Year-ahead inflation expectations edged up to 4.8% from 4.7%, while long-run expectations climbed to 3.9% from 3.5%.

Canada’s raw materials prices increased 2.6% month-over-month in April 2026, following an 11.9% jump in March, as shipping disruptions in the Strait of Hormuz drove energy prices higher. Excluding crude energy products, raw materials prices declined 0.5%. Crude energy product prices rose 8.2% in April, after a 41.1% surge in March, with conventional crude oil up 6.2% and synthetic crude oil rising 17.8%. According to the International Energy Agency, global oil supply fell by another 1.8 million barrels per day in April, following a loss of over 10 million barrels per day in March. Meanwhile, prices for metal ores, concentrates, and scrap declined 0.9%, led by a 3.0% drop in gold, silver, and platinum group metal ores and concentrates. This included decreases in gold ores and concentrates (-2.9%) and silver ores and concentrates (-3.2%).

WTI crude oil futures traded around $96 a barrel on Friday, trimming earlier gains of nearly 3%, as renewed hopes emerged that the US and Iran could reach a diplomatic agreement. US Secretary of State Marco Rubio said there had been “slight progress” in mediated talks with Iran. Tehran is currently reviewing the latest US proposal delivered through Pakistan, although no timeline has been provided for an official response. Despite the renewed optimism, uncertainty persists over whether the conflict can be resolved and whether the Strait of Hormuz can fully reopen, leaving investors highly sensitive to mixed signals from both sides. Even so, WTI futures remain down more than 4% for the week, as markets continue to price in the possibility that the opposing parties may ultimately reach an agreement.

Negotiated wages in the Euro Area rose 2.5% year-on-year in the first quarter of 2026, slowing from a revised 2.9% in the previous period and well below the 5.6% peak of 2024. This deceleration provides some relief to European Central Bank officials concerned about inflation risks from the Iran conflict, potentially allowing the central bank to avoid aggressive monetary tightening as it assesses the second-round effects of the energy shock. Soaring oil and gas prices have already pushed euro area inflation to 3%, above the ECB’s 2% target. With further increases likely, officials have signaled potential rate hikes at June’s meeting. However, some advocates caution, as recent PMI readings point to a sharp economic contraction that could worsen under tighter monetary policy.

Germany’s Ifo Business Climate Index rose to 84.9 in May 2026, up from April’s six-year low of 84.5 and slightly above the forecast of 84.2. However, the index remained weak, suggesting the German economy is stabilizing for now, though the situation stays fragile amid the ongoing Middle East conflict. Companies assessed their current business situation more favorably at 86.1 (up from 85.4), while expectations for the coming months improved slightly to 83.8 (up from 83.5). Sector-wise, manufacturing climbed to -15.0 from -15.4, driven by more positive current assessments, though expectations continued to decline. Services saw a notable improvement to -6.9 from -11.0, with expectations recovering after a two-month slump. Trade sentiment improved to -30.0 from -32.6 as companies viewed current conditions more favorably, though consumer spending remains subdued. In contrast, construction sentiment declined to -24.3 from -23.8, reflecting a less favorable business assessment.

UK retail sales volumes dropped 1.3% month-on-month in April 2026, worse than expectations of a 0.6% fall and reversing a revised 0.6% rise in March. This marked the biggest fall since May 2025, mainly due to a 10.2% slump in fuel sales, the sharpest decline since November 2020, as motorists made fewer journeys and delayed refuelling amid higher prices. This followed a jump in the previous month when many consumers had stocked up on fuel following the start of the Middle East conflict. Excluding automotive fuel, retail trade decreased 0.4%. Sales at non-food stores went down 1.0%, with clothing store sales falling 2.4% to their lowest level since June 2025, as retailers cited volatile weather conditions, weaker demand, and heightened price sensitivity. Non-store retailers also reported reduced sales, with unpredictable weather weighing on seasonal campaigns. On a yearly basis, retail sales were unchanged, compared with forecasts of a 1.3% increase and a revised 1.4% gain in March.