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  • People have started to cut spending they don’t need and you might be surprised to learn that it’s not because of inflation / Digital Information World

People have started to cut spending they don’t need and you might be surprised to learn that it’s not because of inflation / Digital Information World

By on August 15, 2022 0

Inflation is one of the biggest problems in the world, with the majority affecting third world countries. But that certainly doesn’t mean that first-world countries aren’t affected at all. inflation is at an all-time high in the United States as well.

According to new data released Friday by Commerce Signals, a TransUnion company, they analyzed how inflation can and does affect people’s spending.

People usually send in two groups of discretionary and non-discretionary items. Discretionary items are the things one buys with the amount of money left over after spending non-discretionary items like utilities or groceries. So, in other words, discretionary items are non-necessary items like entertainment, etc., and non-discretionary items are the necessities of life.

According to the data, due to the current inflation, people have started cutting back on things like electronics and subscriptions. Data showed there was only a 13% increase in the amount of money spent on discretionary items in July, in contrast to a 16% increase in the amount of money spent on non-discretionary items .

However, while many people believe that all these declines in consumer spending are due to inflation, this is not the case at all as the two are related but not the cause of each other. According to Nick Mangiapane, CMO at Commerce Signals, purchases at food and grocery stores increased by 13%. Of that 13%, 10% comes from an increase in transactions and only 3.5% from the actual price of the item.

In simpler terms, data from Commerce Signal indicates that the amount of food purchases only increased by 3.5%, but data released by the federal government indicates that it increased by 13%, which brings us to the conclusion that people are trading. An example may be that when looking for takeout food, people choose burgers instead of steaks.

What exactly does the drop mean you might wonder? Well, exchanging means replacing a product just because the first one was too expensive. This therefore means that consumers are replacing the products they use with cheaper versions.

The good news is that even though people have started to get a little picky about the products they use and their brands, consumer spending isn’t going down at all. If this continues, the most premium brands could be more profitable than their mid-tier counterparts.

H/T: MarketingDaily

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