Blistering inflation is taking a toll on household budgets, with a majority of Americans now saying that rising prices are causing them financial hardship, according to a new poll from Gallup.
About 56% of U.S. households said they are experiencing economic stress due to inflation, up from 49% in January and 45% in November, Gallup found in its August survey of 1,500 consumers.
The group reporting the biggest increase in hardship: households with annual income of $48,000 to $89,999, with that group experiencing a 17 percentage point jump since November, Gallup noted. Even higher-income Americans — those earning above $90,000 — saw an elevated rate in hardship, rising 12 percentage points over the same period.
Meanwhile, lower-income households experienced a 4 percentage point increase in hardship, although that is likely because people with incomes below $48,000 had been feeling the pain of higher prices since late last year, Gallup's data suggests.
The findings indicate that the hottest inflation in 40 years is eating into the bedrock of the American economy — the middle-class — and even eroding the financial stability of more well-heeled households. One in four consumers told Gallup that they're cutting back on spending to cope with inflation, while almost 20%^ said they're paring costs by canceling vacations and driving less.
That could have major implications for the economy because consumer spending accounts for roughly 70 cents of every $1 of economic activity in the U.S.
A new study from the Financial Health Network found that about 8 million people in the last year said they had regressed from feeling "financially healthy" to just "coping," which means they struggle to save and plan.
"With high inflation persisting for over a year, a majority of Americans now say they are experiencing financial hardship from higher prices," Gallup senior editor Jeffrey Jones wrote in a blog post about the company's findings. "Lower-income Americans were mainly affected early on, but most middle-income Americans and a substantial minority of upper-income Americans are now feeling the strain of higher prices."
Notably, there's a partisan divide in how Americans experience the financial impact of inflation, with almost 7 in 10 Republicans saying high prices are hurting their budgets. By comparison, just over 4 in 10 Democrats say the same thing, Gallup said.
Republicans tend to report a bigger negative impact "likely because of the presence of a Democratic president in the White House," Gallup noted.
More recently, consumers are seeing some relief in the form of lower gasoline prices, which have been declining for weeks after reaching a record high of $5.02 a gallon on June 14. The national average is now $3.75 a gallon — lower than in June, but still 57 cents a gallon higher than a year ago.
All eyes will be on the August inflation report that will be released September 13, with Morgan Stanley analysts expecting headline inflation to drop to 7.9%, from
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