Inflation — a form of regressive “taxation” affecting lower- and middle-income Americans disproportionately — is near a 40-year high of 8.3 percent for April 2022. Moreover, the Consumer Price Index, a broad measurement of what American consumers actually pay for routine items (ranging from food products to airline fares to energy use) rose in April 2022 by 0.3 percent (following a March 2022 increase in the CPI of 1.2 percent).
Given that wage increases for many workers are not keeping up with recent increases in inflation, many American consumers are now finding themselves financially “poorer” compared to the same time last year.
With declining purchasing power, American consumers need to be especially careful to evaluate what consumer goods and services they need; the quantity of these goods and services needed; and what price (the lowest available, and when purchasing online, adding in the items’ shipping and handling charges) for what quality (the highest) they are willing to pay.
An example of just how resourceful American consumers can be is offered by MoneyWise, an online provider of personal finance information, advice, news and tools. A MoneyWise journalist sampled 15 consumer items offered through digital storefronts for major retailers Amazon and Walmart — at Amazon.com and Walmart.com — and found that by using the Capital One Shopping mobile app, a consumer would be able to save $461.24 for these retail purchases after including other online retailers.
Interestingly, 13 of these 15 items were offered to consumers at lower prices by these other online retailers when using the Capital One Shopping mobile app. An assumption that large volume purchasers — such as Amazon and Walmart — would offer an identical product at the lowest price to its retail customers is a common misperception assumed by many American consumers.
Additionally, a consumer ignores “shrinkflation,” or how businesses offer customers less of a product at the same or an inflated cost, at their peril. For example, a product that was previously 12 ounces in weight is now 11.25 ounces or less, or what was once a 24-can box of Coca-Cola now holds 20 cans. Over the last year, industrywide shrinkflation practices continue to be implemented by manufacturers across food product lines. Careful cost-per-unit information (usually found listed under each item in most “brick-and mortar” retail grocery stores) is a useful starting point for the savvy consumer.
As to the availability and quality of products and services, the post-COVID-19 pandemic has created a myriad of issues that are not going away soon. According to experts at Northeastern University, U.S. consumer goods supply-chain problems — beyond the most recent baby formula shortages — will continue well into 2022, and may become endemic, potentially contributing to America’s inflationary woes. Moreover, because of the lack of availability of specific products, consumers need to evaluate carefully the quality of substitutes, ascertaining whether these substitutes meet their product standard and/or specification expectations.
When it comes to the home-related appliance and energy system installation, repair and maintenance service sector, there has been a long-term shortage of technical, trades-oriented labor, and this situation has been further aggravated by the effect of the COVID-19 pandemic. Home-related repair and installation services are a continuing challenge to American homeowners as to their availability, cost and quality. The Better Business Bureau and online customer service reviews all provide helpful information for potential consumers; but “word-of-mouth” referrals from trusted individuals who have used these services recently (and can thus attest to their current availability, cost and quality) is the most effective referral.
Is there any relief in sight for the beleaguered American consumer? Unfortunately, not in the short-term. With interest ratesforecast to continue rising through 2022, the cost of buying available “big ticket” items on personal credit will become increasingly expensive, and therefore will be purchased less often. Persistent high inflation rates are also an added impediment to consumer “impulse” buying. While Americans may not be satisfied with the performance of the U.S economy (and, according to the Gallop’s 2022 Mood of the Nation Survey, they are overwhelmingly not), they are inherently resourceful — and sufficiently ingenious — to become savvy consumers during these trying economic times.