The "Big Shrink": Americans are pulling back as prices rise - over 1 in 4 hit their limit on the prices of household staples

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Aug 19, 2024, 08:56 ET

87% are "fed up" with rising prices, and 27% are unwilling to pay more than current prices, or will cut daily essentials from their shopping lists

GREENWOOD VILLAGE, Colo., Aug. 19, 2024 /PRNewswire/ -- Pricing pressures have caused Americans to pull back, with over 6 in 10 (62%) saying their 'purchasing power' and income in relation to prices is decreasing – and their money doesn't go as far as it used to (82%). A majority (79%) note household goods like cereal and chips dwindling in serving sizes, according to new research from Empower, a leader in financial planning, investing, and advice.

Some 78% are using more of their budget on essential items, and 27% have hit a pricing limit, and aren't willing to pay anything more for many grocery staples, or will cut the items from their shopping lists. Prices are 20% more expensive than February 2020 according to CPI data¹ – so consumers would need to pay $1,218 now for their dollars to have the same purchasing power as $1,000 in 2020.² Consumers say they'll quit buying goods including:

Coffee: Over a third of people aren't willing to pay even $1 more for a cup of joe.
Bread: 1 in 5 Gen X will stop buying loaves of bread if the price increases by more than a buck.
Fresh produce: 1 in 5 Gen Z will chop fresh fruits and vegetables from their shopping lists if the price increases by $1.
Snacks: 20% of Millennials are not willing to pay one dollar more for snack foods like bags of chips or chocolate bars.

Quality and quantity
Almost half (45%) of people notice a change in quality of items they've been buying for years – 79% say there are less chips in the bag, and 54% say that chocolate costs more, but doesn't taste as good. Price increases can influence loyalty, too: around 75% of Americans say it turns them off from a brand, and many are switching over to generic/store-owned brands (77%). Three in four believe the higher prices go, the less they're getting in return.

Sizes aren't the only thing getting smaller: Americans believe Time is Money, and 29% say their amount of free time is shrinking, feeling priced out of enjoying it (58%) as costs have risen. Nearly half of Americans feel priced out of retiring at the age they want (49%), along with financial goals like home ownership (48%), leaving an inheritance (50%) and paying for a college degree (41%). The sentiment extends to starting a business (38%) or buying a piece of one, through investing in the stock market (40%).

Still, optimism remains: 28% of Americans think prices will keep dropping before the end of this year. A third feel they have the opportunity to grow financially by paying down debt (33%) and investing (17%).

More findings:

Inflation generation: 87% say they're "fed up" with rising prices. Baby Boomers are the least willing to pay more than products' current prices.
The long and short on goals: 47% of Americans say they have less disposable income. But inflation is taking a slice out of larger money goals, too: 35% have less in emergency savings, 24% say their net worth is shrinking and 17% worry they'll have to work longer to retire.
Tipflation and fees: 45% say they are being asked to tip more in places where they didn't tip 10 years ago. Nearly three-quarters (73%) say extra fees are being added where they haven't had to pay in the past.
Stocking up: In the last year to save money, 53% switched to a generic brand, 34% downloaded a store's app for rewards/coupons and 21% purchased a store membership to get benefits like free shipping.
Getting smaller: 68% say new houses are getting smaller, but not cheaper. More than half (57%) say streaming services have increased prices, but there is less content.
Dreaming it: Close to a third (30%) would sacrifice their vacation time in order to achieve their financial goals; 1 in 5 would give up their dream home (22%).
Up and down: 37% like the concept of dynamic pricing, even at a grocery store. Two in 5 plan to split more prices with family and friends to make ends meet.

Visit The Currency™ to read Empower's full research report, "The Big Shrink."

*ABOUT THE STUDY
The Empower "The Big Shrink" study is based on online survey responses from 2,203 Americans ages 18+ fielded by Morning Consult between March 22nd–24th, 2024. The survey is weighted to be nationally representative of U.S. adults (aged 18+).

ABOUT EMPOWER
Empower, a leader in financial planning, investing, and advice, is dedicated to creating financial freedom through people and technology. It administers approximately $1.6 trillion in assets for more than 18.6 million individuals³ and is recognized as the nation's second-largest retirement services provider in the U.S.⁴ by total participants. Connect with us on Empower.com, and subscribe to The Currency™ for the latest money news and views shaping how we live, work and play.

Media contacts:
Rebecca Rickert [email protected]
Katelyn Kwiatkowski [email protected]

U.S. Bureau of Labor Statistics. The Consumer Price Index, June 2024 compared to February 2020.
U.S. Bureau of Labor Statistics. CPI Inflation Calculator. June 2024 price change of $1,000, as compared to June 2020.
As of June 30, 2024. Information refers to all retirement business of Empower Annuity Insurance Company of America (EAICA) and its subsidiaries, including Empower Retirement, LLC; Empower Life & Annuity Insurance Company of New York (ELAINY); and Empower Annuity Insurance Company (EAIC), marketed under the Empower brand. Assets under Administration (AUA) refers to the assets administered by Empower. AUA does not reflect the financial stability or strength of a company.
Pensions & Investments DC Recordkeeper Survey (2024). Ranking measured by total number of participants as of December 31, 2023.

Empower refers to the products and services offered by Empower Annuity Insurance Company of America and its subsidiaries. This material is for informational purposes only and is not intended to provide investment, legal, or tax recommendations or advice.

The information contained herein is being provided for discussion purposes only and does not constitute an offer to sell, or a solicitation of an offer to buy or sell securities. All visuals are illustrative only.

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SOURCE Empower