Where are consumers cutting back because of inflation?

Dawn Furnas//June 28, 2022//

Listen to this article

How are shoppers adjusting for inflation? That’s exactly what Provident Bank‘s recent national consumer inflation survey aimed to find out.

On June 10, the U.S. Bureau of Labor Statistics said the Consumer Price Index increased 8.6% for the year—“the largest 12-month increase since the period ending December 1981.” According to a June 28 announcement from Iselin-based Provident, more than 82% of consumers surveyed are cutting back in some way as a result:

10.5% are eliminating all non-essential purchases and
71.67% said they have made at least some changes to personal travel habits.

The survey, which questioned 600 adults ages 18 and older, found some unsurprising changes such as cutting back on eating out and unnecessary travel. However, some respondents are taking a more drastic route to save cash, including skipping meals, conserving water and eliminating meat from their diets.

Other survey findings:

46.33% are using credit cards slightly more or much more frequently compared with last year
41.17% are contributing less to their savings (of that group, 38.46% have less than $1,000 in a personal savings account)
57.83% said they believe they will be better off this time next year

Which price increases hurt the most? Respondents replied: gasoline, groceries and clothing, with 53.33% saying they now spend between $101 and $500 more per month on groceries. Those three categories were followed by baby products, meat, utilities, household goods, milk and alcohol as to which prices were also hitting wallets hard.

The cost of items is on the rise across the board, including gas, which recently surpassed the $5 per gallon mark nationally for the first time. According to the survey results, 32% of drivers are now spending between $101 and $250 more per month on gas, with 13.5% reporting a monthly increase between $251 and $500.

As a result, respondents said they are either reducing or eliminating unnecessary travel by canceling vacations, visiting family less frequently or combining errands into one trip. Some are also opting to walk or ride bikes, use public transportation more and trade in older vehicles for more fuel-efficient ones.

Provident Bank survey results — When respondents of Provident Bank’s recent consumer inflation survey were asked which price increases on regularly purchased products or services have hurt the most, gasoline, groceries and clothing were among the most frequently mentioned items. – PROVIDENT BANK

Additionally, some respondents said they are saving by:

Quitting smoking
Shopping at discount stores and switching to generic/store brand items
Taking on “odd jobs” for extra income
Visiting the salon less frequently
Making coffee at home
Avoiding travel to expensive areas
Video chats with family rather than in-person visits
Postponed or delayed travel until gas prices go down
Remaining within a 10-minute driving distance
Mapping out gas usage before travel

“As bankers, it’s important that we uncover these financial pain points for consumers as it relates to inflation,” Anthony Labozzetta, Provident president and CEO said in a statement. “Similar to the pandemic, it’s a time for financial institutions to step up and work with their customers on how best to help them navigate through these challenging times.”

In a related survey, the New Jersey Society of CPAs asked a group of certified public accountants for their economic outlook for the rest of 2022, and nearly 65% of the 441 surveyed said they expect the state’s economy to get worse (68% expect conditions across the U.S. to worsen). Of that group, 73% said inflation was the biggest challenge for their business.