Consumers See Prices Rising But Plan Big Purchases Anyway, Bank of America Says

Americans are expecting to pay more for everyday items but are planning to make more big purchases anyway, according to the latest monthly Bank of America consumer survey.

Shoppers see fewer discounts and anticipate paying more for staples like groceries, Bank of America said in its March survey. The research backs up U.S. retail sales data released yesterday, which showed signs of consumer strain. According to the Census Bureau, retail spending ticked up 0.2% in February from January, less than the 0.6% monthly growth forecasters had expected.

Nearly 40% of surveyed Americans expect to spend more on groceries in the next three months, the survey found. Half of lower-income respondents anticipate bigger grocery bills over the next year, which is the highest portion recorded since Bank of America started the survey in December 2020. 

More People Plan to Buy Home or New Appliance, Survey Says

Despite bracing for tighter budgets, more consumers say they plan to make big purchases than a year ago, Bank of America said. About 31% intend to invest in home improvement over the next three months, up from 27% last year. The percentage of people planning to buy a new home or appliance—or have a baby—in the next 12 months also increased, the survey found.

More than 40% of surveyed consumers plan to buy a new vehicle in the next year. Americans have been holding on to cars for longer, in part, because of rising prices. The average age of cars on the road recently hit 14 years, according to Apollo Global Management.

Tariffs on China, Canada, and Mexico are seen pushing up motor vehicle prices 6.1%, according to The Budget Lab at Yale. “Assuming an average selling price of $48,000 that translates to an extra $2,900, though the actual effect would depend on the exposure of different models to Canadian, Mexican, and Chinese parts & production,” they wrote earlier this month.