Inflation has hit unprecedented highs. Food and gas prices are soaring, while the cost of living has crept up. Household budgets are tightening and consumer concerns over the economy are mounting. In the latest KPMG Consumer Pulse Survey of 1,000 consumers, 87% are concerned about inflation — of which 43% are “extremely concerned”. Expectations of a recession loom with 72% anticipating one in the next 12 months, and many planning for it.
In response, buying habits are changing.
Shifting spend from goods to services
Close to 70% of consumers surveyed plan to change the amount they spend on discretionary goods due to inflation. Almost half (49%) aim to spend less at restaurants and bars, 41% will cut purchases of luxury goods, and 38% expect to spend less on travel in the coming months.
Rising prices across retail
Nearly all (95%) of consumers surveyed believe prices for products have increased over the last six months. They cite highest price hikes in groceries (79%), restaurants (73%) and travel/vacations (66%).
Rising gas prices may be driving consumer interest in electric or hybrid vehicles, based on feedback from 48% of survey respondents. An estimated 35% of consumers are considering purchasing an electric or hybrid car within one to two years, while 28% plan to do so within a year.