Consumers Say Inflation Twice as Bad as Government Reports

Perception is hitting harder than reality for consumers, as inflation levels balloon to historic highs.

One thing is clear, we’re in it for the long haul.

The Bureau of Labor Statistics (BLS) currently reports an inflation rate of 7.7%, but PYMNTS’s December report, “Consumer Inflation Sentiment: In It For The Long Haul,” finds Americans perceive price increases as being much higher, often twice as much or more, than what the government is reporting.

Consumer perception of severe price increases across key products offers a sobering look at the present consumption climate, with Americans reporting that they believe the cost of many consumer staples has increased by 25% or more. All-important gasoline is perceived by Americans to have risen by a staggering 42.9%.

Despite it being the season of holiday cheer, this ongoing perception and its corresponding paycheck erosion is making American consumers increasingly anxious about the economy — with nearly 3 in 4 (72%) reporting that they are “very or extremely” worried about the U.S. economic situation. Many are pulling back on their spending as a result, or turning to financing for a little holiday help.

A majority of consumers believe it will take nearly two years for things to return to a semblance of normalcy, according to PYMNTS’ December Consumer Inflation Sentiment report. Nearly 9 in 10 (88%) of consumers’ paychecks have not kept up with inflation, and this pinch in purchasing power may be behind the widening gap between what is being reported by the Washington and what is being felt by Main Street shoppers, who are increasingly tightening their belts.

The government data shows that while things are bad, they aren’t that bad. But only a small minority of consumers tell PYMNTS they believe the high inflation will dissipate in the next six months.