Consumers are cutting back the most on dining out and entertainment.
High inflation and the ongoing effects of the pandemic are causing consumers to make cuts in discretionary spending, but not all categories are feeling the pinch.
Dining out tops the list of discretionary spending cuts consumers will make to combat inflation’s effect on their wallets, with 42% of consumers deciding to save on eating out according to First Insight’s new inflation report. The report also revealed that 33% of consumers will cut back on entertainment costs and 30% will reduce their spending on organic or premium groceries as well as vacations. Spending on fast fashion will be cut by 28% of consumers.
In contrast, the data show that consumers are cutting back the least on beauty and personal care, along with pet services.
The report found overall that high prices for gasoline and groceries are having a trickle-down effect on discretionary spending across the board.
The top categories in which consumers will reduce spending to cope with rising prices are listed below.
Dining out: 42%
Organic or Premium Groceries: 30%
Vacations and Travel: 30%
Fast Fashion: 28%
Specialty Coffee and Beverages: 26%
Streaming Services: 24%
Gym Memberships: 21%
Home Decor and Furniture: 21%
Video Games: 20%
Alcohol and Spirits: 19%
Beauty and Personal Care: 16%
Pet Services: 16%
“The effects of the pandemic are still driving consumers’ spending priorities today,” said Greg Petro, CEO, First Insight. “With pandemic restaurant closures followed by limited reopenings because of the Great Resignation, dining out has become much less of a habit for many consumers today. At the same time, millions of pets were adopted during the pandemic and consumers have decided that the happiness of their pets is far more important to them than eating out. These shifts in consumer spending will continue to evolve for the next several years, disrupting many industries in profound ways.”
This report is the second in a series which will continue to uncover the biggest pain points for consumers as they deal with the highest inflation rate in the US in 40 years.