Inflation Puts Consumers on Alert for Discounts

Consumers closed 2023 by increasing their spending — nearly 7% more over what they spent the previous year, according to PYMNTS intelligence data — indicating consumer confidence is on the rise.

This finding comes from PYMNTS Intelligence’s latest edition of its Consumer Inflation Sentiment Report, “The Cautious Spender: US Consumers Now Think First, Spend Second.” The report is based on a January 2024 survey of nearly 5,000 U.S. consumers who were asked about their 2023 year-end spending decisions and how prices and inflation fears shaped those decisions.

Signs of slowly growing confidence peek through the report. Sixty-three percent of survey respondents say they are cutting back on their shopping spend due to rising prices — down from 69% in 2022. Similarly, 51% say they switch merchants to save money, which is something 56% reported doing 12 months earlier.

But another theme threads through the report: yes, consumers appear to be more comfortable spending now, but they are being more strategic when shopping, saying factors such as an item being on sale affects their buying decisions.

And consumers aren’t just keeping an eye out for deals when shopping for themselves, they are also bargain hunting when shopping for others. When it comes to buying gifts, 55% of respondents say that, for the most part, they decide what they are going to buy before any actual shopping begins.

In fact, the fewer the gifts they plan to buy, the greater the preparation. Overall, nearly 62% said when buying one or two items for someone else, they decide on the gifts ahead of time. Less than 18% of those splurging on more than five presents plan their purchases in advance.

Price plays a big part in their gift-giving strategy as well. Consumers say they are more than twice as likely to treat prices as the most significant factor when selecting gifts.

This diligence becomes more pronounced during year-end shopping. Twenty-five percent of consumers say price is the most influential driver behind normal gift purchases, but when shopping during the year-end holiday season, 29% say price is the most important factor.