Consumer sentiment fell in January, dropping to 74.2 from a previous-month reading of 74.5 in the Thomson Reuters/University of Michigan report released Friday. The decline was driven by concerns about rising prices. The current conditions index, a survey of consumers’ willingness to buy big-ticket items, dropped to 81.8 from 85.3 in December.

The index of consumer expectations, a survey of future consumer expectations, increased to 69.3 from 67.5 in December. Consumers expressed optimism about employment growth. Just 22% of respondents said they think the unemployment rate will increase in 2011, the lowest level in more than a decade. Consumers also said they were worried about inflation diminishing their financial prospects.

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