An article summarized by Retail Dive:
Rising inflation and higher everyday costs may finally be slowing down American consumer spending after years of resilience despite economic uncertainty. The Consumer Price Index rose 3.8% in April, marking the first time in three years that inflation grew faster than wages. Economists say this shift means many households are now losing purchasing power, especially as prices continue climbing across essential categories.
Energy costs were a major driver of inflation, with gasoline prices rising more than 11% year over year and electricity prices also increasing. Grocery prices, rent, medical costs, airfare, and home furnishings all moved higher as well. Economists warn that consumers can cut back on discretionary spending like vacations or entertainment, but they cannot avoid paying for necessities such as fuel, housing, and utilities.
Analysts say lower-income Americans have already been struggling with higher costs, and middle-class households are now increasingly feeling financial pressure too. Temporary boosts from larger tax refunds are beginning to fade, with much of that money already spent on necessities like gas. Economists believe the combination of inflation, slowing wage growth, and uncertainty surrounding the Iran conflict and energy prices could significantly weaken consumer spending for the rest of the year.
