A new First Insight report, The State of Consumer Spending: Inflation Impacting Consumer Confidence indicates that consumers are coping with the rapidly rising costs of everything from gasoline to groceries but are becoming increasingly uncertain about prospects for the economy.
According to the report:
- Confidence Has Waned. Most consumers are less confident about spending today because of inflation and are searching for less expensive ways to shop in response to rising prices.
- Promotions and Deals Are More Important. Consumers are looking for sales and promotions in response to rising prices with many saying that they are maintaining a budget and buying less overall.
- Inflation Breeds Job Insecurity. Almost half of the consumers queried said inflation has made them concerned about their income or employment.
- Inflation Is Here for the Foreseeable Future. Consumers are mixed on how long they believe inflation will last, with most estimates ranging anywhere from six months to more than two years.
- Everyone Notices Inflation. Nearly every consumer has become aware of price increases, with gasoline, groceries, dining out, vehicles, apparel/footwear/ accessories and household merchandise prices jumping out the most.
- Daily Lives Are Suffering Disruption. The four biggest pain points affecting consumers’ daily lives are the rising prices of gasoline, groceries, dining out and vehicles.
- Consumers Are Scrimping To Afford Their Daily Lives. Of various spending categories, consumers are cutting back most on dining out due to higher prices followed by groceries, entertainment and recreation, and gasoline.
- Consumers Are Setting Spending Priorities. Almost all consumers are prioritizing their spending as a result of inflation, with groceries getting the most reconsideration followed by gasoline, rent/mortgage and healthcare, home décor/furniture, vacations and gym memberships.
- Consumers Are Cutting Dining Out Spending But That’s Not All. Entertainment, organic groceries, vacations and fast fashion are all categories where consumers expect to reduce their spending.
- Store Brand Products Get A Lift. Consumers will purchase more private-label products as name brands take a hit.
- The Entertainment Industry Will Struggle. Live entertainment, an industry slammed by pandemic lockdowns, will have a difficult recovery as consumers say they will cut back on movie theater attendance, concert-going and nightlife to deal with inflation.
