The idea popular on Wall Street that inflation is in the rearview mirror does not reflect the experience of an increasing share of American households who say they are financially burdened by inflation.
Sixty-one percent of Americans say recent price hikes have caused financial hardship for their household, up six points from the last reading in November, Gallup said Thursday. This is the highest since Gallup began tracking this question in 2021.
When Gallup first asked the question in November of 2021, 45 percent of U.S. adults said inflation was inflicting financial hardship on their households. As inflation climbed in subsequent months, the share of people saying they were experiencing hardship also climbed.
In June 2022, the consumer price index hit a 40-year high of a 9.1 percent annual gain and in August of that month the share of households saying they were experiencing hardship from rising prices climbed to 56 percent.
As inflation moderated in the following months, the share experiencing hardship remained steady in the November poll. Although inflation has come down, the share of households experiencing hardship has risen this year. This suggests that the duration of inflation has a big impact even if the pace slows.
Gallup said that a relatively steady 15 percent of American adults describe the hardship as “severe” and hurting their standard of living. Forty-six percent say the hardship is moderate but is not yet hurting their standard of living.
The hardship of inflation is felt more at the bottom rungs of the economy, undermining President Joe Biden’s claim that his administration would create prosperity from “the bottom up and the middle out.”
From Gallup News:
As has been the case for the past two years, lower-income Americans report greater hardship from inflation than those in higher income brackets. Three-quarters of U.S. adults with an annual household income under $40,000 currently say rising prices are causing them at least moderate hardship, including 29% who say it is severe. Meanwhile, 65% of middle-income adults consider inflation to be a hardship, with 15% saying it is severe. At the same time, less than half of upper-income adults, 45%, say price increases have created hardship for them.
Inflation continues to rank as the most important financial problem for U.S. households even as gas prices have dropped:
A separate Gallup poll, conducted by telephone April 3-25, finds inflation is by far the top trouble mentioned when Americans are asked to name the most important financial problem facing their family. The cost of owning or renting a home (11%) ranks a distant second to inflation, while having too much debt (9%) and a lack of money or low wages (7%) follow close behind. Energy costs, which was second to inflation last year amid high gas prices, has dropped to 5% as gas prices have fallen.
The latest 35% of U.S. adults naming inflation as their family’s top financial problem supplants last year’s 32% as the highest on record in Gallup’s 19-year trend. The previous high for mentions of inflation was 18% in 2008.
The University of Michigan’s survey of consumer sentiment showed last week that expectations for inflation over the long-run are on the rise.