Steady Inflation and High Food Prices Push Consumers Toward Installments

The latest inflation data released Tuesday (Jan. 13) suggests a steady pace of inflation overall, but groceries and other essentials continue to rise faster than the headline number and influence how consumers plan and pay for everyday life.

In December, the Consumer Price Index rose 2.7% year over year, with a modest 0.3% monthly increase. Excluding food, shelter and energy, prices 2.2%, per the data from the Bureau of Labor Statistics.

Housing, Retail Show Gradual Normalization

Housing remains one of the largest contributors to household expenses, but price increases are moderating. Shelter costs rose 3.2% in 2025, with rents up 2.9% and owners’ equivalent rent rising 3.4% over the year. While still elevated, these gains reflect a slower pace than earlier periods.

Retail categories tied to everyday living show mixed but generally contained movement. Apparel prices edged higher, while appliances and certain household goods declined. Medical care services rose 3.5% year over year, consistent with longer-term trends rather than a sudden spike.

Taken together, these patterns suggest consumers are operating in a more stable price environment, even as they remain attentive to how essentials fit within monthly budgets.

Food Prices Encourage Planning

Food remains the most visible reminder of inflation for households. Food and beverages rose 3% in 2025, with food at home up 2.4% over the past year. Within that category, prices varied: Meats, poultry, fish and eggs increased 3.9%, while dairy prices declined and fruit and vegetable prices rose modestly. Food away from home increased faster, rising 4.1% year over year, reinforcing why many consumers are more deliberate about dining choices.

These trends are encouraging consumers to plan purchases more carefully, consolidate trips and seek value. That behavior aligns with PYMNTS Intelligence findings showing that grocery spending remains resilient, with shoppers adjusting how and where they buy rather than solely what they buy.

Paycheck-to-Paycheck Living Reflects Discipline

The data shows that within the Paycheck-to-Paycheck economy, careful budgeting and timing of payments are top of mind. Consumers facing tighter monthly cash flow are more likely to use digital wallets for grocery and retail purchases, not for convenience alone but for the real-time visibility and budgeting tools they provide.

These consumers also tend to spend more per transaction, suggesting intentional consolidation of purchases. Value-oriented merchants benefit from this approach, as shoppers prioritize predictable pricing and broader assortments of essentials. In one read-across on overall resilience, JPMorgan management noted, also on Tuesday, that consumer spending still is intact across both debit and credit conduits.

Paying Over Time Becomes Everyday

As PYMNTS CEO Karen Webster wrote earlier this month, buy now, pay later is evolving into a practical cash-flow management tool rather than a driver of discretionary spending. For many households, installment options help align grocery and household purchases with income timing, offering predictability without relying on overdrafts or late fees.

BNPL is increasingly embedded within digital wallets and debit-linked accounts, allowing consumers to manage essentials from a single financial touchpoint. This shift reflects consumer preference for transparency and control. In an inflation environment marked by moderation rather than volatility, such tools support steadier spending and healthier budgeting habits.

Inflation’s pace may be easing, according to the official data, but the tools that help consumers manage essentials with confidence are becoming a permanent part of the financial landscape.