Are Consumers Moving Past Inflation? The Answer is Complicated.

Could consumers finally be putting the woes of inflation behind them?

In its latest State of the Shopper consumer survey this week, Acosta Group reported that U.S. consumers are spending more and feeling less anxious about inflation.

That improvement, however, comes with a caveat, as 60% of respondents said they are more concerned about higher prices than they were six months ago, particularly within food and beverage.

“The latest findings underscore shoppers’ seemingly conflicted opinions regarding concerns about the economy, tariffs, and their own financial stability,” said Kathy Risch, SVP, Shopper Insights and Thought Leadership at Acosta Group, in a statement. “After the pandemic and five years of inflationary concerns, shoppers have clearly adopted new behaviors. They’ve become accustomed to cutting back on spending, shopping across channels for deals, and splurging, thoughtfully, on those indulgences that are most meaningful.”

Tariffs are a major source of worry. The survey found that most consumers “define tariffs as taxes on imports, but many are confused about what they mean and their broader impact.”

Out of all tracked consumer categories, food and beverage was the largest source of tariff anxiety at 60%, surpassing apparel (42%) and electronics (51%).

There’s a generational divide on tariffs: Younger consumers were more optimistic, as 45% of Gen Z said they anticipate the economic policy will prove beneficial in the next three to five years. However, 70% of millennials and 62% of all consumers surveyed fear that tariffs could lead to a recession before the end of the year.

Inflation may have permanently changed behavior: Even as some shoppers feel more comfortable spending freely, the impact of the 2022 inflationary wave is still being felt. A quarter of respondents are visiting specialty grocery stores less often due to financial constraints; 30% have increased their trips to discount grocery and dollar stores.

The wave of new private label products in retail also appears to be making a difference as 48% of shoppers said they now buy store brands “because they want to – not because they have to.” Only 16% said they buy private label products due to financial necessity.

That’s some key validation for retailers who have revamped their private label lines over the past couple years, from CVS to Walmart to Gopuff, with innovation frequently emphasizing better-for-you positions and en vogue flavor profiles.

Affordable indulgence still wins: Although dining out has declined, 66% of consumers listed it as their “top splurge” when it comes to indulgences, meaning CPG brands will still compete with on-premise when it comes to pitching shoppers on treats.

“Brands and retailers must respond by creating opportunities for small, satisfying splurges,” Risch said in a statement. “By delivering special experiences through quality, uniqueness, and indulgence, brands and retailers can tap into consumers’ desire for ‘little luxuries.’”