Rising inflation is having a negative affect on consumer confidence, according to the latest data from First Insight Inc. The report, titled, “The State of Consumer Spending: Inflating Impacting Consumer Confidence,” revealed that 75 percent of shoppers have less confidence to spend money today as the rate of inflation soars to a 40-year high.
The report also showed that 97 percent of consumers are reprioritizing how they spend “in order to afford their top four most critical purchases: groceries (56 percent), gasoline (43 percent), housing costs (29 percent) and health care (18 percent).” Authors of the report said 82 percent of those polled said they are searching “for less expensive ways to shop through sales and promotions, 40 percent are staying within a budget and 28 percent are simply buying less overall.”
Greg Petro, chief executive officer of First Insight, said with inflation at 8.5 percent, “rising prices will continue to impact all businesses for the foreseeable future” and send this most recent poll “indicates that many industries, which had hoped for a post-pandemic rebound in 2022, specifically hospitality, travel and entertainment, may be faced with yet another difficult year.”
Petro said product categories that saw an increase in spending during the pandemic, “such as jewelry, automotive, premium groceries and apparel, will most likely see a contraction in consumer spending for the next several months.” He noted that companies “must work to get an immediate understanding of how consumers are going to change in the days and weeks ahead by engaging with them directly to anticipate and respond.”
With discretionary expenditures, the First Insight poll found that 42 percent are cutting back on dining out in order to buy food and gas. “Overall, 33 percent are spending less on entertainment, 30 percent are cutting organic or premium grocery items, 30 percent are saving by traveling less and 28 percent are cutting out fast fashion,” the report stated.
However, the report did show that, despite inflationary pressures, “consumers are committed to keeping up appearances and remain devoted to their pets, the report noted. “Only 16 percent will cut beauty, personal care or grooming services. Pet service remains important to 84 percent of the consumers surveyed.”