Last year, prices surged in the United States by 7%, the largest yearly increase in nearly four decades. Consumers in the United States, whose spending drives the world’s largest economy, are now expressing their dissatisfaction with rising prices.
Consumer’s Views On Increased Price
Sevan Tavoukdjian says, “I find that I’m always watching the pricing of various goods now”. “It’s revolutionized the way I shop.”
Last month, the 34-year-old actor moved into his own apartment in New York City. And when he learned how much it would cost to furnish it, the costs shocked him.
So he canceled his furniture plans. And instead posted a message on the “Buy Nothing” Facebook group in his neighborhood, where people sell unwanted stuff for free.
According to analysts at the University of Pennsylvania Wharton School, the average American family had to pay nearly $3,500 (£2,600) more last year than in 2020 for the same products and services due to inflation.
Housing costs increased by 4.2 percent, grocery bills increased by 6.3 percent, and clothes costs increased by 5.8 percent. The price of living and dining furnishings, which Mr. Tavoukdjian was looking for, increased by more than 17%.
However, wages have not kept pace with inflation, forcing consumers to defer purchases. Also, substitute less expensive alternatives, or, like Sevan, look for something free.
The scenario has sparked a rise in activity on neighborhood exchanges such as the Buy Nothing Project, which Mr. Tavoukdjian used to equip his apartment, which has seen exponential development since the outbreak began.
Rising Prices Affect Upper-Class Families
Over the last two years, the group’s global membership has more than doubled to more than 5.3 million people. To keep up with demand, it recently released an app.
The amount of posts per day on Freecycle, a comparison site, has climbed by around 15% in recent months. Owing to financial worries, according to creator Deron Beal.
Even families with higher salaries, who might otherwise be immune to the pressures, are rethinking their everyday spending, according to Tania Brown, a Georgia-based financial advisor with more than 20 years of expertise.
According to Kathy Bostjancic, chief US financial economist at Oxford Economics, the crunch contributed to a drop in consumer spending in December, a trend that is likely to continue.
Her business forecasts a 3.5 percent increase in consumer spending this year. Which is still healthy but down from last year’s enormous 8 percent increase, excluding inflation.
“Consumers, both out of price ‘sticker shock’, and also frustrated that the… choices they have available are so lean, have decided to make alternative choices – whether that’s not to buy at all, or find a second-hand couch,” she says.
Given the complex mix of factors driving inflation – supply chain disruptions, labor shortages, government support, and so on – it’s difficult to predict when households would benefit from lower prices if demand declines, according to economist Zheli He of the University of Pennsylvania.
Despite rising prices, she claims that purchases of some difficult-to-replace commodities, such as gasoline, have continued to rise.
Mr. Tavoukdjian, a literature professor dealing with a reduction in his teaching hours, says he’s been blown away by what people are offering in his local Buy Nothing group. Everything from new pillows and plates to hand-me-down children’s toys and clothes – and even more unusual items like breast milk.
However, the price shock from his initial search has lingered. He didn’t pull out his wallet to buy a new vacuum cleaner when he broke recently. Instead, he went to Buy Nothing for assistance.