Shoppers turn cautious as inflation eats into their budgets
Consumer Spending Slowed in July
Shoppers reigned in their spending in July as inflation continued to erode their purchasing power. The personal consumption expenditures price index, a closely watched measure of inflation, rose 0.1% in July after jumping 1.0% in June. Overall, prices have increased 6.3% over the past year, the biggest 12-month increase since January 1982.
The slowdown in consumer spending is a sign that inflation is starting to take a toll on the economy. Consumers are becoming more cautious about making big purchases and are cutting back on discretionary spending.
What does this mean for the Federal Reserve?
The Federal Reserve is likely to take note of the slowdown in consumer spending when it meets next week to discuss interest rates. The Fed has been raising interest rates in an effort to cool inflation, but it may need to slow down the pace of rate hikes if consumer spending continues to weaken.
What can consumers do?
Consumers can take steps to protect themselves from inflation. They can shop around for the best prices, use coupons and discounts, and consider buying generic brands. They can also try to negotiate lower prices on bills and services.
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