No Relief in Sight for Paycheck-to-Paycheck Consumers Amid Inflation

The latest inflation readings are in.

While the usual parlor game gets underway of dissecting if the data is better or worse than expectations, and what the Federal Reserve will do, the inescapable reality is that there’s no relief in sight for paycheck-to-paycheck individuals and families.

In terms of the headline numbers, inflation is holding “steady,” as reported by the Bureau of Labor Statistics for the month of September via the Consumer Price Index (CPI) report. The 3.7% rate, as measured from a year ago, matches the August reading.

Steady Inflation Is No Relief

And, yes, perhaps “steady” is better than “accelerating” inflation. Month over month, prices are up 0.4%.

Food prices are up 3.7% year over year, and within that designation, the cost of food at home continues to increase although at a moderating pace, up 0.1% month over month. The BLS reported that the index for cereals and bakery products rose 4.8% over the 12 months ending in September. The dairy and related products index decreased 0.2% percent over the year-ago period.

Dining out is more expensive than has been in several months, up 0.4% month over month — and increasing at a 6% pace. Shelter is 0.6% more expensive compared to last month and is 7.2% more expensive than last year.

There’s one bit of respite, perhaps. The cost of clothing slipped 0.8% in September, yet it remains 2.3% higher than a year ago.

In short, the staples of daily life — what we eat, what we wear, the places where we lay our heads and raise our families — are becoming ever more expensive.

PYMNTS Intelligence found that incomes are not keeping pace with the increasing costs of daily life. The data showed that 15% of the more than 2,000 individuals surveyed said their incomes had increased through the past year, and that leaves 85% attesting that their take-home pay is trailing inflation’s stubbornly entrenched pace of gains.

Almost all consumers said they have concerns about the economy, as more than half of individuals stated that inflation is here to stay and likely will not return to pre-2021 levels until spring 2025. That’s a long way away, and the real bite of inflation has been higher than the low-single-digit pace estimated through the “official” data.

PYMNTS’ findings suggest that consumers perceive retail prices have soared more than 20% in the past year.

The old saying is that perception is reality. Consumers perceive that the pinch they feel at the register each time they open their wallets is unrelenting and will be felt over the long term. They also perceive that wages won’t be enough to assuage those pressures.

We’re headed into the last few months of the year, already seen as a financially stressful time. As a result, consumers are pulling back on nonessential spending. September’s inflation data could have been worse, but it will not do much to dissuade that belt-tightening.