Spending among U.S. consumers fell last month as shoppers focused on their basic needs.
Numbers released Wednesday (March 15) by the Commerce Department showed sales falling 0.4% as consumers spent less on things like furniture and restaurant meals.
The drop followed a 3.2% rally in spending the prior month, and shows the continued grip inflation has on the American wallet.
The report shows consumers spending less on restaurant meals and department store visits — including furniture sales, which jumped in January — while prioritizing essentials like groceries.
Wednesday’s report comes one day after the release of the latest government inflation data — via the Consumer Price Index (CPI) — which showed that inflation’s pace was 0.4% in February, as measured month over month, and 6% year over year, slowing from a respective January rate of 0.5% and 6.4%.
And although the 6% annual reading is the slowest increase since September of 2021, a closer look at the numbers shows that just a few categories of spending saw actual declines.
Fuel oil prices dropped 7.9% in February from January but were still up 9.2% year on year. The prices of used cars and trucks fell by 2.8% in the latest monthly data and were down 13.6% year on year, a sign that getting around is somewhat less of a burden on household budgets.
But many categories remain stubborn, such as food, up 0.4% according to the CPI. Inflation on food prepared or consumed at home rose by 0.3%, down from 0.4% at the beginning of the year — and up 10.2% annually.
Food consumed away from home showed the same rate of inflation that’s been in place since January, at 0.6% month on month and a faster pace since the end of 2022.
“We note that quick-service restaurants (QSRs) and other establishments might be adversely affected as consumers make tradeoffs — perceiving that it’s relatively cheaper to eat at home than out,” PYMNTS wrote.
Meanwhile, recent research by PYMNTS finds consumers taking steps to adjust their spending to meet the rising challenges of the current economic climate.
“New Reality Check: The Paycheck-to-Paycheck Report,” a collaboration between PYMNTS and LendingClub, shows around 70% of consumers have made at least one card management adjustment, or at least one compromise to mitigate their credit card debt load in the past year.
Some popular card management strategies include taking steps to budget more, which 32% of consumers tell PYMNTS they’ve done, while separately, 31% report spending less.
When it comes to compromises consumers are making in order to reign back their card debt load, nearly 40% have cut back on some everyday pleasures in order to regain a little financial flexibility, while 27% of consumers have tapped into their savings or investments for extra money to keep on top of credit card debts.
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