9 in 10 Americans Are Worried About Inflation, But Solutions Are Limited

By Ashok Ramprasad | November 21, 2021
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Most Americans are worried about inflation. (Image: https://pixabay.com/photos/grocery-store-man-shopping-market-3802358/> CC0 1.0)

Americans across the country are bracing themselves up for a financially difficult holiday shopping season due to a spike in the prices of essential items in recent months. The prices of necessities like food, gas, and rent have all gone up largely due to supply chain snarls, labor shortages, and other pandemic-related effects.

The Consumer Price Index (CPI), used as a gauge for inflation, revealed that consumer prices rose by 6.2 percent in October compared to the same period last year. This is the highest inflation rate in over three decades, according to the Labor Department. On a monthly basis, the CPI increased 0.9 percent against the estimate of 0.6 percent.

Fuel prices rose 12.3 percent month-over-month and 59.1 percent compared to a year ago. Prices of used cars and trucks soared by 2.5 percent in October and were up by 26.4 percent over the last 12 months.

Meanwhile, one in four Americans claimed to have ended up being pushed into a lower standard of living due to the surge in prices. A slash in the real income over the next year is expected by nearly half of the American families.

Only solution is to cut back

A recent survey conducted by Country Financial has revealed that nearly 88 percent of Americans are worried about the surging inflation. The study, involving around 1,031 adults aged 18 and above was conducted between Oct. 22 and 25, showed that many Americans planned to cut short their spending.

About 48 percent said that they would cut back on their expenditure on restaurant meals and takeout, 29 percent would buy less apparel, 20 percent are canceling or postponing their travel plans, 30 percent will opt out of upgrading their personal technology devices, and 13 percent have decided to cut down on their driving.

However, expenditure on retail also rose more quickly than anticipated in October. U.S. retail sales grew 1.7 percent, ahead of the forecasted 1.5 percent growth by analysts, the Commerce Department reported on Nov. 16.

Scott Jensen, manager of the financial planning support department at Country Financial said that the amount spent by consumers is likely to go up with inflation by default as costs increase. By swapping expensive products with cheaper ones where they can, consumers often try to counteract increased prices.

Supply shortages make substitution difficult

However, customers would face a challenge in doing this considering the current product shortages, Jensen noted. “If I can’t substitute or I can’t have the freedom to choose, then I am more affected by price increases and what’s left,” Jensen told CNBC.

As consumers are looking to offset higher prices or a shortfall in products later, spending could be on the rise. With the holiday season looming near, experts have also suggested making the purchases now. However, with inflation continuing to gnaw away the gains in salaries and wages, not everyone is financially prepared to shell out big bucks during the holiday season.

A recent survey from CreditCards.com revealed that most consumers plan to spend either less or roughly the same this holiday season as compared to last year. However, the fact that holiday shoppers will find themselves more in debt due to rising credit card purchases is a cause for concern.

Another survey from DebtHammer.org showed that though more than 78 percent Americans have put aside some savings for holiday shopping, 66 percent expect to use “buy now, pay later plans” and 58 percent said they plan to take a payday loan or other short-term loans.

While how long the inflation would last is up for discussion among experts, Jensen is of the view that being a “conscious consumer” would prove to be helpful under such circumstances. According to him, shoppers need to find ways and means to reduce their expenditure and be tactical when it comes to purchasing now to counteract higher prices in the future.