As inflation continues at rates not seen since the 1980s, consumers are growing increasingly anxious, especially because their perception of inflation is more extreme than what is reported by government sources. For example, consumers perceive gas prices as having increased 43%, while the BLS reports 26%. In this environment, it only makes sense that consumers are preparing for a long-haul inflationary period and even a recession.
In “Consumer Inflation Sentiment: In It For The Long Haul” we surveyed 2,379 U.S. consumers to better understand how they perceive the current economic situation and their concerns about the future.
Here’s some of what we learned:
• Even consumers whose wages have kept pace with inflation are cutting their spending.
Cutting back on expenses is almost fashionable at this point, with 59% of shoppers who have not lost buying power due to inflation saying they are cutting back on non-necessary purchases. Naturally, consumers whose paychecks lost the greatest amount of purchasing power are the most likely to cut back on nonessential spending or switch to cheaper merchants.
• U.S. consumers believe inflation will remain high until mid-June 2024, or 20 more months, despite improvement in month-over-month levels.
The inflation rate has not been this high since the 1980s. It peaked at 14.6% in March of 1980, and it took another six years before price increases normalized. In terms of duration, this period of escalated inflation is currently on track to be the longest of the 21st century. Inflation has not been above the Fed’s 2% target for this long since May 2004 to August 2006.
Across all consumer groups, the majority believe inflation will last longer than six months. To learn more about how consumers are preparing for long-term inflation, download the report.