- Flights and travel costs are expensive amid 41-year-old high inflation.
- But people still go on vacation even if it is expensive.
- Consumer spending data also shows a drop in spending on vehicles compared to the start of this year.
Even though inflation is at its highest level in four decades, Americans are still spending heavily on travel and experiences.
The consumer price index rose 9.1% in the year ending June according to data released this week, higher than 8.6% in the year ending May. The 9.1% rate — the highest since November 1981 — is affecting people’s drinking behavior.
Although some people change the way they spend their money, such as looking for cheaper alternatives in a time of high inflation, people put a lot of money back on certain goods and services. Travel and transportation spending has increased this year, but on the other hand, people aren’t spending as much on vehicles, according to consumer spending data.
The following chart shows the percentage change from January 2022 to May 2022 in personal consumption expenditure from the Bureau of Economic Analysis. The items and services in the chart are among the things that have seen the largest percentage increases in consumer spending over this period.
People are splurging on vacations and good times away from home despite higher prices, as travelers once again partake in the ‘revenge trip’. Outbound travel spending rose 68.4% in May from the start of the year. Spending on air transportation is also almost 40% higher than in January. Also, people are spending more on accommodation as they buy hotel and motel rooms for their travel needs.
Monthly data on personal consumption expenditure are only available up to May. But with demand for travel on the rise as people go on holiday for the 4th of July and throughout the summer, travel may continue to be a popular thing people spend money on. , even with the high costs that consumers face.
Consumer spending on gasoline also increased in May compared to January, with a percentage increase of 27.7% for gasoline and other fuels, reflecting the spike in gasoline prices over the past few years. month. However, data from the Energy Information Administration and the AAA show that gas prices have fallen since their peak.
Some goods and services have also seen personal spending fall from where it was at the start of the year. As seen in the following table, this includes various types of vehicles such as motorcycles and new cars or light trucks.
People may not be willing to spend big on cars right now with skyrocketing monthly payments. Data from Cox Automotive’s research shows that the monthly payment for a car has reached an all-time high.
The graph above also highlights that spending is down from the start of this year for different types of repairs.
In general, people spent more on services than goods in May – spending on services up $76.2 billion but down $43.5 billion on goods from April according to the Bureau of Economic Analysis.
Is inflation impacting your spending habits? Does this change your monthly budget? Contact this reporter at [email protected]