The Pulse

Inflation Is Causing 85% Of Americans To Adjust Their Essential Purchases

Over three quarters of American’s (78%) have little to no room to increase their budget allowance in line with rising inflation

A new study from Forbes Advisor reveals 40% of American’s are relying on credit cards more often as a result of climbing inflation and almost one in five (18%) have claimed that the primary purchase they have cut back on is food/essentials. Access the full report here.

A new study by Forbes Advisor has uncovered that four in five Americans (85%) are being forced to change their purchasing habits, as a result of rising inflation. A new survey of 2,000 Americans reveals how inflation has affected people’s lives—and how they expect it to change in the foreseeable future.

Household Budgets Are Strained For The Majority

Findings have laid bare the harsh reality that household budgets are greatly strained across the country. When respondents were questioned about spending against their current budget, the majority (78%) expressed there was very little wiggle room. Of this, more than one quarter (26%) claimed that they had already spent more than they could afford. Furthermore, 27% of respondents’ claimed to be at their spending limit and 25% stated that they have little space left in their budget.

Less than 10% of respondents had “a lot” of space within their budget. Meanwhile, 8% of people do not have a budget, while 5% chose not to disclose their finances.

Where are you currently in your budget?
% of Respondent Answers
I have a lot of space left in my budget
9%
I have a little space left in my budget
25%
I am at my budget
27%
I have already spent more than I can afford
26%
N/A; I do not have a budget
8%
Prefer not to say
5%

Americans Struggle With Various Price Upsurges

Earlier this month it was announced that food prices have risen 11.9 percent over the last 12 months. This is the greatest 12-month increase Americans have experienced since the period ending April 1979. More than this, people are dealing with rises in more essential bills; from energy to electricity and fuel. As a result, our study found that many are increasingly reliant on their credit cards.

To make ends meet, two fifths (40%) of survey respondents with credit cards are using them more often. Over one quarter of respondents (26%) have more recently started carrying a balance on their credit card to cover their monthly spending, in addition to 38% who were previously. Although consumers seem to be more reliant on credit cards, 64% of respondents are concerned about how increasing interest rates are going to affect their debt.

Where Are People Making Spending Cuts?

With many struggling to keep within budget in such uncertain circumstances, Forbes Advisor looked to uncover where people had made the most cutbacks. Unsurprisingly, it is nonessential items that have been the most impacted, with two thirds of respondents spending less on discretionary items, including entertainment and socializing.

Although consumers seem to be more reliant on credit cards, 64% of respondents are concerned about how increasing interest rates are going to affect their debt...

Further to this, only 9% of respondents claimed that inflation has not disrupted their travel plans. Almost one third (29%) have been forced to cancel or postpone a trip and 34% are traveling less often as a result. Meanwhile, over one in six (17%) are downgrading their travel experience to a more affordable option.

Additionally, 70% are choosing to delay spending on major unplanned purchases. However, this may not be so easy to do in the long term. Schedule flexibility for household repairs or new vehicles may later become urgent needs and sources of financial pressure, Forbes Advisor have warned.

Unfortunately, many are having to make difficult decisions to reduce their spending on everyday essential items. Almost one in five (18%) have claimed that the primary purchase they have cut back on is food/essentials. Similarly, 19% of respondents are being forced to cut back on gas, transportation and travel for work.

When questioned on how people are modifying their spending habits surrounding essential items, consumer behaviors varied. Over one third of respondents have not amended the items they’re purchasing, but simply have to spend more money on them. However, over half (54%) are making conscious decisions, in order to attempt to stay within their budget – be it choosing alternatives or buying smaller amounts. Trying to change your spending habits and budget carefully is a great way to help ensure you do not end up in financial trouble down the road.

 

 

 

Methodology
This online survey of 2,000 U.S. adults was commissioned by Forbes Advisor and conducted by market research company OnePoll, in accordance with the Market Research Society’s code of conduct. Data was collected on June 2-3, 2022. This survey was overseen by the OnePoll research team, which is a member of the MRS and has corporate membership with the American Association for Public Opinion Research (AAPOR). For a complete survey methodology, including geographic and demographic sample sizes, contact [email protected]

 

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