(The Center Square) – Americans are changing their shopping habits because of rising prices, a new study from Morning Consult finds.
According to the report, American consumers significantly cut back on their discretionary spending and focused on essentials as inflation shows no signs of slowing down.
“Gas and food prices soared last month, and consumers responded by cutting back on nonessential purchases,” the report said. “Affordability concerns for household expenses like groceries and housing payments escalated, affecting higher-income adults as well as the most financially vulnerable. Discretionary purchases’ share of wallet trended lower to make space for the rising cost of household staples in recent months. The pullback in spending has been more pronounced for physical products than for services, as consumers increasingly revert to pre-pandemic trends.”
Federal data has shown the most rapid rise in inflation in decades. The Bureau of Labor Statistics latest data for its Consumer Price Index, a leading marker of inflation, showed prices increased another 1.2% in March, part of an 8.5% rise in the past 12 months.
“Increases in the indexes for gasoline, shelter, and food were the largest contributors to the seasonally adjusted all items increase,” BLS said. “The gasoline index rose 18.3 percent in March and accounted for over half of the all items monthly increase; other energy component indexes also increased. The food index rose 1.0 percent and the food at home index rose 1.5 percent.”
The Morning Consult report found this increase has pushed Americans to cut back on things like eating out, clothing and other apparel, personal care and transportation.
“Purchase intentions for used vehicles fell as driving costs increased, and a declining share of prospective home buyers will likely hold back demand for furniture, appliances and home improvement supplies going forward,” the report said. “Some of the most stressed areas of budgets, including housing and vehicles, are seeing a moderation in demand that could flow through to pricing. Gas prices have already declined from their March peak, coinciding with a modest recovery in consumer sentiment in early April.”
The report comes on the heels of a survey from the National Federation of Independent Businesses, which found that 86% of those surveyed had raised prices because of inflation.
“Inflation is a new challenge for most small business owners,” said Holly Wade, executive director of NFIB’s Research Center. “Inflation has reached levels not seen for the last 40 years and is dominating business decisions for small employers across the country. Small business owners have been adjusting business practices in order to compensate for the inflation pressures resulting from supply chain disruptions, staffing shortages, and rising gas prices.”
Federal data also suggest those prices aren’t going down anytime soon. The Federal Reserve released its “Beige Book,” a regular report that collects a range of economic data and interviews from around the country. The most recent report confirmed the inflation trend and showed that experts don’t expect it to fade out, at least in the near future.
“Inflationary pressures remained strong since the last report, with firms continuing to pass swiftly rising input costs through to customers,” the report said. “Contacts across Districts, particularly those in manufacturing, noted steep increases in raw materials, transportation, and labor costs.”