Friday, June 9, 2023

Inflation Is Finally Slowing, But Not Fast Enough To Stretch Your Budget This Holiday

Inflation is finally coming down, but for many consumers the relief is coming too late. They have already traded down and cut down on luxury. Now, they are digging deeper to make their money grow. Some have started cutting back on spending on their children or have gone to the shops empty-handed. Inflation is finally showing signs of cooling, but subtle changes in how Americans are shopping are warning signs. This relief isn’t enough to ease the pressure on their finances this holiday season. While economists have focused mostly on shoppers cutting back on spending on non-essential items like store brands or recreational activities and home furnishings, a deeper dive into how consumers shop can reveal Turns out that many of them are no longer just trying to save money, but are practically living paycheck to paycheck. salary. As of November, 63% of Americans were living this way, according to Lending Club’s monthly report. It is up from 60% in October and close to the year’s high of 64% in March. Even though inflation has slowed to 7.1% in the 12 months to November from a 40-year high of 9.1% in June, Americans are already bent under its weight. The data shows that more people are shopping around paychecks and maybe even kids want more this holiday. Marshall Cohen, chief retail industry consultant at analytics firm NPD, said the economy has moved away from a phase when shoppers could buy whatever they wanted. “Now the rising cost of living is taking its toll.” Small business owners are worried. Not cheery, nor bright: Holiday shopping begins with inflation-lowering spirits in and out of shopping, but more frequent gas stations and grocery stores can provide windows into how consumers are faring. The more financially strapped consumers are, the more often they will visit gas stations and grocery stores. Synchrony Financial executive said at a recent Goldman Sachs investor conference. The same is true for grocery shopping. As inflation neared its 40-year high in early summer, Walmart executives said in an earnings conference call that some customers were switching from full to half-gallon milk because they could not absorb rising food prices. . Now, those shopping habits have spread to even more people. “As shoppers worried about spending too much on groceries between July and September, one of the responses was making shorter trips and buying fewer items at each trip to the grocery store.” said Rajeev Sharma, founder and CEO of VideoMining, which measures and tracks in-store shopper behavior. “Quick” trips, where shoppers had fewer than five items in their baskets, increased to 51% of all grocery store visits in the summer and early fall, up from 50% in the spring and early summer. Meanwhile, “stock up” visits, where shoppers had more than 15 items in tow, remained at 15% of all store visits, he said. Surviving high prices: Expired food items get new life from budget shoppers when inflation rises, but are they safe? Value Shopping: Avoid These 5 Costly Mistakes When buying groceries, kids are about to feel the cut. Typically, parents who feel the squeeze will cut spending on themselves first, then their kids. For some families, however, the children have already been cut off. Toys & Games “sentiment remains awful” this holiday, with year-over-year receipts showing declines in units sold, trips to the store, and average spending per visit in October. and November, said analysts at financial services firm Jefferies. Discount Shopping: The Best Holiday Shopping Gifts? Dearness Relief. WHY YOU CAN GET IT – AND DEEP DISCOUNTS. Previous record: $9.12 billion spent in one day: 2022 to set new Black Friday online spending record, says report And it’s not just toys and games. Gap CEO Bobby Martin said last month that Old Navy and Gap have seen weak sales of baby and kids apparel. That being said, it continues to experience a softening of spending and purchasing frequency from its lowest-income consumers,” said Bobby Martin, Gap interim CEO. “Returning purchases due to increasing financial constraints,” Neil Saunders, managing director of analytics and consulting firm GlobalData. At Costco, people are still buying TVs, with unit sales up from a year ago. However, Christopher Howers, a retail analyst at JPMorgan Bank, said, “Consumer Highlighting another example of weakness,” they’re opting for the little ones. Looking for Sales: Holiday Sales & Deals Are Here – 100 Year-End Sales You Can Buy Now Expensive Returns: Don’t Wait for Returns This holiday season many stores will have a strict return policy The best way to save money is to spend nothing While people are spending more time shopping than ever this year, there is an increase in people walking away without buying anything Videomining’s Sharma said, even shoppers who normally enter a store and buy their favorite grocery item, they are taking longer to browse for a lower priced option. Yet, 45% of shoppers who browsed walked away without buying. “There are many factors that drive “shopper leakage” or “walking away” rates, but high prices are definitely a major one,” he said. “The average per unit price of a grocery product was $4.21 in the third quarter, the highest on record.” For example, 10% fewer shoppers bought vitamins in the last quarter than a year ago, even though they spent an average of 5% more time looking at them, Sharma said. Megan Schoenberger, an economist at the accounting firm KPMG, said Americans would look to spend even more aggressively next year. But where? Maybe Candy, which saw a surprising 7% increase in shoppers who spent less time buying it, said Sharma. Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can contact him at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.

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