Core inflation hit its highest pace since 1982 in September, with more people living paycheck to paycheck and struggling to stay on top of bills.
The core measure of the Consumer Price Index (CPI) — which strips out food and energy — hit a rate of 6.6% compared to August’s 6.3%, a situation that could mean the battle against inflation isn’t over, according to the report from the Bureau of Labor Statistics (BLS) on Thursday (Oct. 13).
On a monthly basis, the core CPI rose 0.6% in September, the same as in August, and up from 0.3% in July.
See also: New Study: 60% of US Consumers Have Cut Spending Due to Inflation
Escalating inflationary pressures have changed the lifestyles of many American consumers, with 60% of people surveyed in a recent PYMNTS study indicating they were living paycheck to paycheck, with almost 25% saying they had trouble paying bills.
PYMNTS research also found that 92% of consumers have noticed higher product prices and almost three-quarters have seen the increases in their monthly bills. While the study “New Reality Check: The Paycheck-To-Paycheck Report: The Inflation Edition” showed that all income levels cited increases in products or bills at similar rates, financially struggling consumers were more likely to consider such increases to be widespread and distressing.
Read more: Paycheck-to-Paycheck Consumers Rethink What’s Essential
The BLS report showed that housing prices — about one-third of household spending and a bigger percentage of core inflation — led the way, with the index up 0.7%. Transportation, including air travel and mass transit, saw prices increase 1.9% in September. Medical services went up 1%.
Living paycheck-paycheck combined with worsening inflation is causing consumers to pause and take stock of what “essential” really means for everything from everyday bargains to monthly subscriptions, per PYMNTS study.
Matt Pavich, senior director of retail innovation at Revionics, an AI-powered retail price optimization solutions company, told PYMNTS that with retail prices up again, inflation will be a factor for consumers when it comes to holiday shopping.
“Retailers will absolutely need to focus on their price perception and provide consumers with great value and offers on the items that they care most about across all channels headed into the winter. Throughout the year, this has mostly involved using analytics and AI to surgically balance pricing moves in response to rising costs with the goal of meeting the demands of budget-conscious consumers,” Pavich said.
“As the holidays approach, this remains as important as ever, but also means that promotions and markdowns will become more critical. Savvy retailers with the best analytics should focus heavily on improving their price perception through winning promotions, appropriately timed markdowns, and a strong offering of high-value private label products,” he added.