We’re all booking trips. But what we’re able to spend once we get away from it all … well, that remains to be seen.
Delta Air Lines reported earnings on Wednesday (April 10), and CEO Ed Bastian said there has been “real strong demand” to travel, telling Yahoo Finance that “the spring and summer season is going to be quite healthy on the travel side.”
But Wednesday also brought news, via the Consumer Price Index (CPI), that what we might call the “staples” of travel — apparel and dining out — are getting more expensive. There may be some respite overseas, where the euro is moving closer to parity with the U.S. dollar. But here at home, the CPI points to higher prices as we get out and about.
The Index accelerated 0.4%, overall, in March, and 3.5% on an annual pace, faster than expected. While much of the discussion Wednesday, at least on Wall Street, will likely focus on the dimming prospects of interest rate cuts from the Federal Reserve, consumers are likely feeling the pinch of higher shelter costs, where that metric was up by 0.4% in March and by more than 5.7% from last year’s levels.
Inflation’s Resurgence?
Food consumed away from home was up 0.3% month over month, and now is 4.2% more expensive than a year ago, far outpacing the food consumed at home (read: groceries), which showed an annual inflationary pace of 1.2%.
Apparel prices were 0.7% higher in March, accelerating from the 0.6% growth seen in February, and flat to declining prices seen in previous months.
There are some indications, from recent PYMNTS Intelligence data, that consumers have been resilient when it comes to spending discretionary income on clothing. In the “The Nonessential Spending Deep Dive Edition” of our continuing monitoring of the paycheck-to-paycheck economy, we found that 36% of individuals who said they were spending money on those discretionary items were buying clothes.
But there are some hints of caution here. “For fiscal year 2025, overall we expect to see cautious consumer that is mindful of discretionary purchases in light of inflation and high interest rates,” Guess CFO Markus Neubrand told analysts during the company’s most recent earnings call.
Similarly, though our data show that a vast majority of consumers, no matter their income or demographics, have been spending on restaurants and bars, there is some evidence of pressures, too. The data from the paycheck-to-paycheck report show that more than 82% of consumers living paycheck to paycheck with issues paying bills have spent money on dining out, and 90% of those not living paycheck to paycheck have done so.
Separate data detailed here last month, in the PYMNTS Intelligence “Connected Data” report indicated that 58% of consumers made restaurant purchases as of mid year, down 9% from May, and average spending levels were slightly lower.
The latest CPI data came in hot, as they say, and we’ll know more about consumer spending trends as earnings season kicks off later this week.
