Inflation Cooled but Essentials Tightened Their Grip

Inflation in the United States appears contained for the moment, yet the latest reading suggests consumers may be navigating a calm that could prove temporary.

The Consumer Price Index rose 2.4% year over year in February, according to data released on Wednesday (March 11) and increased 0.3% month over month on a seasonally adjusted basis, according to the Bureau of Labor Statistics.

That annual pace matches the reading recorded in January, indicating that broad price pressures remain relatively stable across the economy.

The data arrives before what economists increasingly view as a possible inflationary jolt tied to geopolitical tensions and energy markets. Energy prices rose 0.6% in February and Brent crude prices were roughly 33% higher than a month earlier, a surge that could ripple through transportation, logistics and consumer prices if sustained.

For now, however, the inflation picture remains uneven. While headline inflation sits near the Federal Reserve’s long-run target, several everyday spending categories continue to climb at a faster rate.

Services and Essentials Continue to Apply Pressure

A closer look at the CPI components reveals that certain segments still exceed the overall index. Shelter costs rose 3% over the past year and food prices increased 3.1%. Within food spending, meals away from home climbed 3.9% during the same period, while food at home rose 2.4%.

Service categories also continue to account for a large portion of inflationary momentum. Services excluding energy increased 2.9% year over year, and medical care services rose 4.1% over the same period.

These categories matter because they dominate household budgets. Housing, groceries and healthcare represent recurring expenses that are difficult to postpone or substitute, which means even modest price changes affect household finances.

Consumers have responded to those pressures with adjustments that extend beyond simply buying less.

Research from PYMNTS Intelligence indicates that financial strain increasingly shapes how households shop and pay. Many consumers facing tighter budgets are shifting toward online retail and digital payment methods that offer greater visibility into spending or access to flexible financing.

The findings suggest that financial pressure does not necessarily suppress spending outright. Instead, it changes how consumers structure purchases and manage payments.

Food Costs and Financial Stress Shape Payment Choices

Food spending illustrates this shift particularly clearly. Grocery purchases often serve as a barometer for inflation, yet purchasing behavior suggests that households are adapting rather than withdrawing.

Consumers experiencing financial stress often spend more per grocery transaction than those with lower financial strain. In one example cited in PYMNTS Intelligence research, high-stress consumers spent an average of $109 on their most recent grocery purchase compared with $95 among low-stress consumers.

This pattern may reflect consolidation of purchases or efforts to stretch trips to the store. It also suggests that households increasingly rely on financial tools that allow them to smooth spending across pay cycles.

Digital wallets and installment features play a growing role in that process. Among consumers experiencing financial pressure, the share using digital wallets for retail transactions rose notably during 2025, and wallet usage is often linked to access to buy now, pay later options.

Karen Webster, CEO of PYMNTS, noted on Wednesday that consumers are not primarily focused on maximizing rewards or loyalty programs. Instead, they are trying to manage cash flow and maintain flexibility in the face of unpredictable expenses.

“Consumers are constantly managing the gap between paychecks, sometimes consciously, often on autopilot,” Webster wrote, noting that credit cards, installments and BNPL serve as tools for navigating that gap rather than competing products in the consumer’s mind.

Her observation reflects a broader shift in consumer finance behavior. Households increasingly view payment methods as interchangeable mechanisms for balancing income timing and expenses.

Installments Likely to Remain Central as Inflation Evolves

If energy markets push inflation higher in coming months, those flexible payment tools may become even more central to consumer spending behavior.

Many households already operate under tight financial constraints. Research shows that roughly two in three Americans live paycheck to paycheck, even if they do not always report outright shortfalls in meeting expenses.

That reality means that even moderate price increases can influence how purchases are financed. Installments and BNPL plans allow consumers to convert immediate expenses into predictable payments, which can help preserve liquidity during periods of uncertainty.

If inflation accelerates again due to higher energy prices or geopolitical disruptions, the trend toward installment-based spending is unlikely to reverse. Instead, consumers will continue doing what they have quietly done for years: assembling a stack of financial tools that allows them to manage cash flow one purchase at a time.