Who felt biggest financial pinch from rising gas prices in February
As people queue up at Costco to get discounted gas prices, gasoline prices remain high. Regular at $5.39 per gallon.
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After the onset of Covid-19, the greatest economic impact was felt by the poor.
According to Morning Consult’s February report, this same group is experiencing the greatest pinch on their finances as gasoline prices continue to rise and historical high inflation pushes consumer costs higher.
Kayla Brun, Morning Consult’s economic analyst, says that those with less than $50,000 per year have already seen a decrease in the amount they save and spend.
She said that people from this income bracket are now seeing their margins shrink.
Higher earners, however, have managed to absorb cost increases while not having to reduce their spending.
Bruun explained that lower-income adults feel the effects of rising gas prices and are forced to trim their discretionary spending.
She stated that “the highest earners of income, those who make $100,000 annually or more per year, could actually increase their purchase and celebrate the ending of omicron to some extent in February.”
According to Morning Consult., February saw a 13% increase in gas consumption month over month.
It was only the third highest spending category that saw a rise. With 19% and 17% respectively, the spikes in hotels and airfare were larger.
The omicron version of Covid reduced, but rising prices and seasonal factors are responsible for rebounding in areas related to recreation, travel and personal care.
How much of a pinch high gas prices can take out household budgets will depend on how fast income grows.
Morning Consult estimates that the average income has increased by 4.9% over a previous year. The U.S. Bureau of Labor Statistics has also seen an increase in average incomes. Consumer Price IndexThe index that measures prices paid by consumers has increased 7.9%. This indicates that income gains have not been keeping up with inflation.
Morning Consult said that workers are better off than last year. According to Morning Consult, 61% adults earned income through work in February, compared with 57% the year before. The same thing, 13% less adults rely on unemployment benefits than the 19% that said so last year.
The tax refunds that many expect to get in the next few months are a temporary light spot. According to Morning Consult the average refund received in February was $2845, which is nearly double what an American adult earns monthly.
On March 10, 2022, a person shop for groceries in Lincoln Market in Prospect Lefferts Garden in Brooklyn, New York City.
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Morning Consult reports that adults living in low-income households are facing housing challenges as well.
The February price of housing was 10% higher than it was a year ago.
This is largely due to rising rental prices which caused renters’ average monthly spending to increase by 15% over the previous year. Comparatively, the average monthly spend of homeowners who have mortgages was not significantly higher than in previous years.
Morning Consult reports that adults earning less than $50,000 annually spend more than 15% on groceries than those with the highest incomes.
According to Bruun, while all income levels are affected by the price rise phenomenon, households with lower incomes feel it more because they have less financial cushion.
“It is possible that what we are seeing in the lowest income group could somehow work its way up the higher income brackets,” Bruun explained.