Inflation and rising consumer costs are taking a big toll on American consumers, according to the latest Real Financial Progress Index, released this week by BMO Harris Bank.
About 60% of survey participants said inflation has seriously affected their personal finances; a quarter said it has done major damage.
Thirty-six percent of respondents reported that they have reduced their savings because of inflation, and 21% have reduced their retirement savings. A quarter of the sample said they will have to delay retirement.
The survey found that younger Americans are feeling the most pain, with more than 60% of 18- to 34-year-olds having reduced contributions to their savings.
BMO and Ipsos conducted the survey from March 30 to April 25 among 3,407 U.S. adults. The quarterly survey measures Americans' sentiment around financial confidence.
Coping With Increased Costs
"Prices across the board — from cars and gasoline to groceries and other everyday essentials — are rising at the fastest pace since the 1980s," Paul Dilda, head of consumer strategy for BMO Harris Bank, said in a statement. "Consumers must think differently about their finances in this inflationary environment."
In fact, they are. Eighty percent of those surveyed plan to change their behavior to offset the effect of inflation and rising costs of everyday essentials:
- 46% either dine out less or consciously spend less when doing so
- 42% shop for groceries in a different way, opting for cheaper items, avoiding brand names and buying only essentials
- 31% drive less to save on gas
- 23% spend less on vacations or are canceling them altogether
- 22% take other measures, such as canceling subscriptions
The survey found that women are more likely than men to alter their lifestyles, including changing the way they shop for groceries, dining out less and canceling subscriptions.
Dilda noted that a financial expert can offer advice on successfully managing one's personal finances, including learning ways to save and which types of accounts to use, and moving from knowing what you should do with your money to actually doing it.
