I went to the supermarket yesterday and carefully weighed the price of each product I was planning to buy. I looked for cheaper options, acceptable substitutes.
I am mainly talking about grocery shopping. I was looking for food, home cleaning products, and essential cosmetic products. After I decided what to buy, I went straight to the registers, not allowing myself to browse the store and buy something I didn’t really need. I counted every dollar.
How many people can relate to this? Probably more than there were last year, as inflation has caused many of us to tighten our wallets.
According to data from the U.S. Department of Agriculture, the all-items Consumer Price Index (CPI), a measure of economy-wide inflation, increased 0.2% from June 2025 to July 2025. However, over the 12-month period from July 2024 to July 2025, the CPI grew 2.7%. At the same time, food prices grew 2.9%.
With U.S. producer prices falling, August brought a little relief, indicating that domestic companies have taken on a portion of import tariffs.
“It does look like retailers have been eating tariff costs in recent months,” said Santander Chief Economist Stephen Stanley, according to a report from Reuters.
How does all this make consumers feel?
Stressed by high prices, consumers are changing habits around the upcoming holiday shopping season, research reveals.
Image source: Getty Images
Consumer economic sentiment has dropped
A recent poll from the Associated Press-NORC Center for Public Affairs Research revealed that the necessity of food has now become a major source of stress for 53% of Americans. Around 33% admit that grocery expenses cause minor stress, per the poll conducted in July.
New data from McKinsey’s ConsumerWise research released August 29 reveals that consumer sentiment in the U.S. declined last month, amid higher costs and economic anxiety. Moreover, consumer optimism has steadily declined since November 2024.
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Every quarter, McKinsey asks U.S. consumers how they feel about the economy and how those attitudes impact their spending.
Research key takeaways on consumer economic sentiment:
- 41% of consumers remain optimistic about the U.S. economy.
- 21% of consumers are pessimistic about the economy, while 38% confirm mixed sentiment.
- 24% fewer consumers cite tariffs as a primary issue than in the previous quarter.
- Consumers plan to spend the same amount on essentials like baby supplies, food, groceries, and gas as they did last quarter.
- Consumers intend to reduce spending on semidiscretionary items (fitness and wellness services) and discretionary items (flights, cruises, and sports equipment).
“Our findings reveal that many shoppers are approaching the holidays with caution and practicality, adjusting their budgets and habits accordingly,” reads the report.
Consumers are changing habits around the upcoming holiday shopping season
Nearly half (46%) of U.S. consumers plan to spend the same amount on holiday shopping as last year; however, one in four aims to spend less.
Compared to many European countries, the number of people in the U.S. who plan to spend about the same amount for holiday shopping is notably lower. This suggests that American consumers definitely feel the impact of the current state of the U.S. economy.
“I’m going to be spending the most on gift cards this holiday season, because I really can’t afford shipping costs for anything else. Gift cards are inexpensive to ship, and they tend to make my family and friends the happiest because then they can pick out their own gifts. A lot of my friends and family members are suffering financially this year, and actually a gift card for a grocery store or even a gas station would be appreciated more than a piece of jewelry or artwork or a typical Christmas gift.” one female baby boomer was quoted as saying.
Another consumer’s strategy for this holiday season includes shopping earlier to avoid higher prices later on.
Price concerns among consumers continue to rise
According to University of Michigan’s Surveys of Consumers – August 2025, consumer sentiment dropped around 6% from July, while being 11% higher than in April and May. However, it is still over 10% lower than it was six and 12 months ago.
“Buying conditions for durable goods subsided to their lowest reading in a year, and current personal finances declined 7%, both due to heightened concerns about high prices,” reads the report.
Additionally, forthcoming global research from Qualtrics XM Institute stresses price sensitivity, according to a report by CX Dive.
Related: New CPI data send inflation signal to Fed interest-rate-cut vote
Isabelle Zdatny, head of thought leadership at Qualtrics, said the research discovered that consumer worries about rising prices grew more than any other concern year over year.
“What was top of mind and what they were most worried about, absolutely seems to be pricing concerns and pricing sensitivity,” Zdatny said. “Better prices was a big impetus to begin spending, and then good value for money was a big reason why people kept spending and staying with a company.”
Consider beef as an important food staple in the U.S. Its price grew a staggering 12% from June 2024 to June 2025 — at an average price of $6.12 per pound, it is understandable that consumers are becoming more price sensitive.