US consumer sentiment continued to rise in late September, reaching a five-month high on more optimism about the economy in the wake of the Federal Reserve’s interest-rate cut.

The University of Michigan’s final September sentiment index rose to 70.1 from the 69 preliminary reading released earlier this month. The latest figure issued Friday follows an August index of 67.9.

Consumers expect prices to rise at an annual rate of 2.7% over the next year, the lowest since the end of 2020 and down from the 2.8% expected last month. They saw inflation rising 3.1% over the next five to 10 years.

The increase in sentiment followed a Sept. 18 decision by Fed policymakers to lower interest rates by a half percentage point as they guard against a deterioration in the job market. Further reductions in borrowing costs are helping to underpin consumers’ outlook on the economy and their personal finances.

Earlier Friday, government figures showed a modest advance in August household spending.

While expectations earlier in the month showed some concerns about the labor market, consumers’ views about unemployment improved in latter weeks, the university’s report showed. This reflected in part the Fed’s decision to lower rates.

Some 55% of respondents see declining borrowing costs in the coming year, the largest share on record. That’s leading to improving views of buying conditions for big-ticket items and homes, which were the most upbeat since April.

“Sentiment appears to be building some momentum as consumers’ expectations for the economy brighten,” Joanne Hsu, director of the survey, said in a statement. “At the same time, many consumers continue to report that their expectations hinge on the results of the upcoming election.”

Consumer sentiment among Democrats rose in September to a five-month high, while it also edged up among Republicans and political independents.

The university’s current conditions gauge rose to a three-month high of 63.3, while the expectations index increased to the highest level since April.

Consumers’ outlooks for their financial situations climbed to a four-month high in September. Their views of the economy over the coming year were the most upbeat since March.

This article was provided by Bloomberg News.