Target CEO Brian Cornell has reportedly predicted that Americans will reduce their driving hours and lessen the amount they spend on shopping this year due to high gasoline prices and advancing inflation.
“Some of the historical ways consumers react to inflation will play out again in 2022,” Cornell said Sunday at an event organized by the National Retail Federation in New York. “You’ll drive fewer miles, you’ll consolidate the number of times and locations where you shop.”
Consumers will prospectively move to homecook dining rather than the constant restaurant dine-ins. Shoppers would likely look for cheaper brands instead of the most costly national and international brands.
The Bureau of Labor Statistics recently announced that the United States has seen an all-time high inflation in December and the consumer price index in America had reached the highest, reaching 7% higher than the previous year.
The cost of gas has reported heightened year-after-year by approximately 50% in November. And as per a report from the American Automobile Association, prices fell throughout most parts of November to December but later skyrocketed back up again earlier this January.
The recent 1.9% drop in retail spending is a major blow that economists have failed to anticipate. It’s clear that consumers are not as enthusiastic about shopping, and restaurants have also seen less demand from customers since last month when their sales dropped by 0.8%.
The coming months will be an important indicator as to how higher inflation affects consumer spending according to Cornell. Cornell noted that he is waiting until after these next few weeks before drawing any conclusions about the impact this boost in prices has on citizens’ ability or willingness to spend money.
“We’re going to learn a lot about how the consumer reacts in the next 60, 90, 120 days to rising prices,” the businessman said at the event.
According to the AAA, the national average price of a gallon of gas was $3.31 as of Monday morning. That’s significantly higher by $1 than the same day last year, the average price was $2.39. Even though gas prices saw a downward trajectory in December, many analysts have said that it could hit $4 per gallon in the days to come.
Opinions expressed by NY Weekly contributors are their own.