Despite slowing inflation, consumers are still worried about prices

A new survey from Deloitte found that seven in 10 Americans said they’re still worried about the price of everyday goods. The indicator is down from the 83% who expressed the same concern back in the summer of 2022, when inflation hit a recent peak of 9.1%.

• The annual rate of inflation in January, for comparison, was 3.1%, according to the latest consumer price index.

“Despite low unemployment, GDP growth, and solid retail sales numbers, financial and geopolitical anxiety weigh heavily on the US consumer’s psyche,” Stephen Rogers, managing director of the Deloitte Consumer Industry Center, said in a statement.

In addition, Deloitte’s financial well-being index was 99.0 in January, down marginally from 99.8 a year ago. The research group highlighted that this index had trended inversely with headline inflation since 2020. But shoppers are still keeping a close eye on prices.

“After navigating inflation for two-plus years, consumers’ price expectations are moving slower than moderating inflation rates,” Rogers said. “Their intention to pull back on nondiscretionary items like groceries underscores the price fatigue and anxiety US consumers feel. Business leaders must adjust their strategies to rekindle profitable loyalty and volumes.”

Recent efforts by big box retailers such as Walmart and Target to promote affordable options reflect this pressure.

• Target last week relaunched a popular private label brand of low-priced essential items, most of which cost under $15, and launched a new Target-only brand with products priced as low as $1.
• On Tuesday, Walmart similarly told investors it’s not relying on price increases to drive profits, but instead focused on affordability and higher volume.

However, Deloitte’s survey diverges from other widely cited measures of consumer sentiment.

The Conference Board’s Consumer Confidence Index hit a two-year high in January, and the University of Michigan’s Survey of Consumers showed sentiment rose 13% in January to its highest level since July 2021. Both measures said slowing inflation and expectations of rising income helped boost confidence and tamp down on pessimism.