Just as the retail landscape started to stabilize, rising prices at the pump are shifting consumers spending habits once again. Although nearly half of consumers (43.2%) do not believe gas prices will have a major impact on their spending, others are choosing to scale back on vacation plans, new clothes, and even groceries, according to a new National Retail Federation survey.
Many retail sectors, from cars to clothes, will feel a pinch. According to the survey, nearly one in three consumers (31.6%) plan to trim or halt travel and vacation plans due to rising gas prices. Consumers also plan to reduce the number of times they eat out (26.9%), will spend less on clothing (20.9%) and will cut back on groceries (15.9%). Some consumers (13.6%) are also delaying major purchases like cars, TVs, and furniture.
“Retailers know that when consumers are forced to spend more of their disposable income on gasoline, they will scale back spending in other areas,” said NRF President and CEO Tracy Mullin. “Ultimately, higher prices at the pump act as an additional tax on consumers, and consumers dont like to be taxed.”
Not surprisingly, household income plays a factor in who will be affected by gas price increases. While more than half of consumers (52.9%) with household incomes greater than $50,000 say they are not likely to feel a major impact by rising gas prices, only one in three consumers (38.1%) with household incomes under $50,000 say the same.
“Even if consumers wallets arent completely drained by the rising cost of fuel, an increase in gas prices has a psychological effect,” said Phil Rist, Vice President of Strategy for BIGresearch. “Though some consumers are only paying $4 or $5 more a week to fill up their cars, many will be more conscious of what they spend in other areas to make up for the small, but significant, loss.”
More than a third of consumers (38.5%) said that increased gas prices would impact their spending over Memorial Day weekend. Consumers aged 25-34 will be the most affected, with 44.3 percent planning to adjust Memorial Day spending due to rising gas prices.
According to the survey, despite the rising cost of gasoline, only 4.2 percent of consumers have increased carpooling.