Things are about to get worse.
Following a year of strong retail sales, the high inflation rate is finally impacting consumers.
Recent data reveals that at the end of 2021, retail sales dropped 1.9% despite the holiday season, as the first signs of rising costs affecting consumer spending reared.
However, some experts believe the slump may have been due to consumers choosing to shop earlier in the year to avoid supply chain shortages and shipping delays.
Retail stores weren’t the only group affected; non-store retailers’ sales figures plummeted by 8.7% month-over-month following a decline of 1.5% in November.
These figures reveal a grim trend which shows that spending is catching up to consumers, with Americans being deeper in debt.
Data also shows that more than one-third of U.S. households said their financial situation worsened over the past year, despite more than three-quarters of Americans getting some type of pandemic relief.
A recent NerdWallet, Inc. study also revealed that U.S. household debt increased by 6.2% to $155,622 bringing the total nationwide household debt to $15.23 trillion.
Speaking to Fox Business, James Knightley, chief international economist at ING, said the shift in sentiment can also be attributed to price hikes becoming more tangible.
However, surging gas and food prices aren’t only to blame, as one-third of Americans say household income decreasing is to blame for their worsening financial situation. Something substantiated by the latest CPI report, which reveals median household income fell by 3% as the cost of living increased by 7%
Americans are also struggling to keep up with surging inflation as more reduce spending on necessities and have begun digging into emergency savings.
The looming interest hike could exacerbate the situation as loans would become costly, something that would push struggling Americans over the edge.