According to Bank of America Corp., US consumers feel the impact of rising rents and other increased costs and are spending less on credit-card purchases.
Spending on credit and debit cards per household increased in July by 5.3% from a year earlier, but decreased from June. The economists led by David Tinsley said in the report that real spending is under pressure.
Americans are facing the fastest inflation in decades because of higher costs of food, energy and shelter, which is leaving less money for discretionary purchases. Rent payments are still historically high for people earning between $51,000 and $150,000 a year, even though gas prices have dropped, according to the institute.
BofA says consumer spending remains resilient despite inflation.
Anna Zhou of the Bank of America Institute said that relief from lower gas prices and retail promotions encouraged consumers to continue to spend.
Consumers have generally been shifting their spending from goods to services as Covid- related restrictions fade, but goods spending got a boost from promotions like Amazon.com Inc.'s Prime Day last month. Airfares for airlines, lodging, entertainment and restaurants are included in services spending.
As gasoline prices fell throughout July, a household's average gas spending as a share of total card spending dropped to 9.3% for lower income households, down from a peak of 10% in June.
Consumer prices in the US are expected to have risen by 2% in July, which would be the smallest increase in more than a year.
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