Consumers Continue to Feel Pressure on Spending This Summer
After months of worry, rising costs due to inflation continue to plague consumers, who report hitting a metaphorical wall as the summer begins.
As a part of its ongoing pulse on consumers’ behaviors and sentiments, KPMG surveyed nearly 1,000 U.S. adults to better understand the impact of rising prices and recession concerns on consumers and their category spending. Notably, the report states that consumers are expected to spend 10 percent more for regular monthly living expenses in May 2023 compared to May 2021.
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KPMG’s report shows that, compared to winter 2023, consumers are pulling back and expect to spend a smaller percentage of their monthly household spend this summer across essential and discretionary categories. Consumers are, however, expecting to spend more on essential goods and services throughout 2023 citing groceries, automotive, prescription medications and personal care products as key categories. Compared to one year ago, 83 percent of consumers said they believe that prices have increased across all products.
When looking specifically at how consumers were planning to spend in the apparel category, KPMG found that 30 percent expect to spend less and 29 percent expect to spend more in summer 2023 compared to summer 2022.
At the same time, almost 80 percent of survey respondents told KPMG their cost of living has increased by more than 5 percent and 54 percent of consumers reported having less than $5,000 in savings accounts.
“Consumers, who have remained resilient in weathering the inflation storm for the past year, are nearing the brick wall,” said Matt Kramer, consumer and retail national sector leader at KPMG. “Consumers have been managing their budgets to adjust for rising prices and are actively preparing for a recession. They’re pulling back on discretionary spending and are focusing on building their savings accounts.”
At the same time, KPMG found that consumers are planning to travel this summer. Just more than 60 percent of survey respondents said they have plans to travel, compared to just 49 percent in summer 2021. Almost 80 percent of consumers said they plan to take one to two trips this summer and 18 percent said they are planning to travel internationally.
For those planning to travel, consumers in the Northeast region and Gen Z consumers are the most excited about international trips, compared to other respondents. Hotels were cited as the most preferred travel accommodations among all consumers; however, Gen Z respondents are more likely to consider rental homes (such as Airbnb), hostels or other shared living arrangements.
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