The steep pace of inflation may have slowed a bit, but the question is whether the slight drop in food prices will be enough to give consumers some financial relief before payday.
The Bureau of Economic Analysis reported that personal consumption expenditures (PCE) rose 0.3% month-over-month across all categories, including food and other staples, a slower pace from a 0.5% month-over-month increase in March.
Looking more closely, prices of overall goods increased by 0.2%, while prices of services increased by 0.3%.
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Food prices fell 0.2% after remaining flat in March and rising about 0.5% in previous months.
The data showed that disposable income rose slightly to $20.85 billion from about $20.81 billion in March as inflation eased at least somewhat. But at the same time, personal savings fell slightly from March to April, from $747.1 billion to $744.5 billion. The personal savings rate was 3.6%, down from a recent high of 4.1%.
According to data from PYMNTS Intelligence, 58% of consumers said they are cutting back on non-essential spending due to rising grocery prices in the first few months of 2024. With roughly 60% of consumers living between paydays, the cost of keeping the fridge stocked is driving many households to cut back on spending.
It remains to be seen whether April's data marks the start of a larger trend in which inflation headwinds subside and consumers find new energy. But as seen in other data from PYMNTS Intelligence, the basics of life — food, clothing and shelter — account for roughly a quarter of spending. So markdowns, especially at grocery stores, could help. Walmart, Amazon and other companies have cut food prices broadly.
These pressures were evident in April retail sales data released earlier this month.
The Commerce Department said retail sales remained unchanged in March, but was revised down to a 0.6% increase from February, down from the previous figure of a 0.7% increase.
Pressure on discretionary spending
The most notable declines were seen in the discretionary categories, even as the overall headline figures remained stable.
Sales at non-store retailers, a popular proxy for online sales, fell 1.2% for the month. General merchandise stores fell 0.3%, sales at sporting goods and hobby stores fell 0.9% and retail sales at health and beauty stores fell 0.6%.
Grocery sales rose 0.8% this month, a figure that compared with BEA price decline data on Friday and suggested consumers were filling their shopping baskets.
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