Your business has most likely noticed that the spending habits of the public have changed significantly in the recent past due to concerns about inflation.
A recent CNBC and Morning Consult survey has unveiled a notable trend in American consumer behavior, revealing that a staggering 92% of respondents are actively reducing their spending in response to concerns about inflation. This shift aligns with caution expressed by major retailers like Walmart, Target, Home Depot, and Best Buy during the first quarter.
The survey underscores the pervasive impact of inflation on individuals in every income bracket, with middle-income Americans, earning between $50,000 and $100,000 annually, reporting the highest level of concern about higher prices (92%). In comparison, 88% of both low- and high-income groups expressed similar concerns. Notably, this indicates a slight improvement for high-income households compared to a year ago when 96% were concerned about inflation.
Over the last six months, nearly 80% of consumers have adjusted their spending patterns, cutting back on nonessential goods such as entertainment, home decor, clothing, and appliances. Essentials like groceries, utilities, and gas have also seen reduced spending by two-thirds of respondents, with many opting for cheaper alternatives or simply purchasing less.
Inflation’s impact has driven consumers to seek value, as evidenced by the rise in private-brand penetration at Walmart U.S., which has increased by about 110 basis points compared to the previous year. Additionally, the survey indicates that value-oriented grocery stores have outpaced overall grocery spending.
Despite economic challenges, consumers don’t anticipate changes in their spending habits for the remainder of the year. Two-thirds of respondents plan to continue cutting spending on essential items, and 77% intend to reduce spending on non-discretionary goods.
The survey also illuminates specific categories experiencing significant cutbacks due to inflation. Clothing emerged as the hardest-hit nonessential category, with 63% reporting reduced purchases since the beginning of 2023. Similarly, spending at bars and restaurants was the second nonessential category to experience cuts, with 62% reporting reduced expenditure.
Other categories facing cutbacks include major household-related spending on renovations and appliances, as well as electronics like computers and phones. Best Buy CEO Corie Barry notes that customers are making trade-offs, indicating a dramatic shift in consumer behavior influenced by personal experiences with inflation.
In conclusion, the survey highlights the widespread impact of inflation on consumer spending habits, shaping a challenging economic landscape where individuals across income levels are compelled to rethink and reduce their expenditures.
Nearly all Americans cut spending amid inflation: CNBC survey
