Consumers Pare Spending on Grocery and Retail Even as Inflation Slows

Inflation is slowing, but April’s data showed the damage has been done to consumers’ wallets.

The Bureau of Labor Statistics found that the Consumer Price Index was up 0.4% in April. It increased 0.1% in March.

In terms of food eaten at home, the prices paid by consumers for groceries were down 0.2% in April, as measured against March and building on the latter’s 0.3% slide.

Two months of declines may not be all that palpable, given the fact that grocery prices are 7.1% higher than they were a year ago.

And food consumed away from home continues to get pricier. The cost of eating at restaurants (included in this category) was up 0.4% in April, following March’s 0.6% bump. The category is up 8.6% from April of last year.

Pulling Back on Quantity, Quality — and Maybe Both

Percentage of shoppers who responded to increased prices in either retail or grocery

PYMNTS data that tracks spending habits since July 2022, leading right into April, showed that there are a few levers that consumers have been pulling as inflation has remained so stubborn. They can reduce the quantity of what they buy and/or reduce the quality. They can change merchants. Or they can do none of the above, which indicates they didn’t adjust anything — and the implication is they kept spending more (because inflation has been in the mix).

When it comes to groceries, only about 20% of consumers that shop for groceries did not take any of those actions in the grocery aisles (whether brick-and-mortar or virtual), which means that the majority (80%) of these consumers did make a move of some sort to offset inflation.

Share of consumers reduing purches of retail products

Nearly 15% scored the trifecta — moving to reduce the volumes of what they bought, the quality of what they bought, and where they bought it. The remaining 65% of these consumers took steps that included buying fewer items.

Retail products were hit even worse, with 85% of shoppers making a move of some sort and over 22% scoring the trifecta.

Looking specifically at apparel, prices continue to rise at a steady pace, with BLS finding 0.3% gains in April matching March’s boost. Clothing is 3.6% more expensive than it was a year ago.

PYMNTS’ findings dovetail with the government data. Clothing has been more expensive and can be thought of as among the more discretionary of discretionary items. Of the roughly 69% of consumers who have cut back on at least one retail category, clothing tops the list at more than 57%.

The headlines may trumpet that inflation is slowing, but by no means are price declines bringing relief across the board. Consumers may be waiting for an end, or at least a pause, in what seems to be a never-ending spate of rate hikes from the Federal Reserve. But there’s a huge gulf between what we read in the papers and what we see in the pantry. April is proof positive that we’re cutting down on expenses when and where we can.

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