Inflation Data Shows Traveling and Food Prices Rising
The latest data on personal spending matched expectations.
And the parlor game as to whether the Fed will pause or even cut interest rates continues.
Yet the Personal Consumptions Expenditures index (PCE), as released by the Commerce Department on Thursday (Nov. 30), shows that the prices for food and services continued to increase as consumers spent more on experiences and travel. October’s activity, as measured in the Thursday report, may be a precursor to holiday season spending, and where we may see some budgetary pressures down the line, as PYMNTS Intelligence data has uncovered that individuals are using cards, among other options, to pay for those experiences.
The Commerce Department’s release showed that inflation was flat overall, measured month over month, and stood at 3% higher than a year ago. Energy prices slipped 2.6% in October, which helped pressure inflation’s growth.
But food prices were up 0.2% in October, month on month, and still are 2.4% higher than last year.
The prices for services were up 0.2% from September and 4.4% from last year.
Spending on Services and Getting Away from it All
“Within services, the largest contributors to the increase were other services (led by international travel), healthcare (led by hospital and nursing home services), and food services and accommodations (led by accommodations),” the release noted. In the meantime, the rates of growth for personal income are slowing, as the Commerce Department estimated that in October, personal income grew by 0.2% — essentially matching inflation — down from growth of 0.4% seen in September, month on month, and 0.5% in August.
Wages and salaries grew by 0.1% in October, a marked slowdown from the 0.5% pace seen in preceding months. Personal interest payments, which include the interest paid on credit cards and other monthly obligations, topped $571 billion, a peak notched through the past several months and leagues above the $424 billion recorded as recently as March of this year.
Headed into the waning months of the year, it seems that travel and experiences will continue to be a key area of spending, springboarding off a summer where PYMNTS Intelligence detailed that the number of leisure travelers grew by 22% this year compared to 2022.
PYMNTS Intelligence noted last month that credit cards “continue to be the preferred choice” among consumers for financing their leisure travel expenses — an option embraced by two-thirds of respondents. The use of cards has been embraced by a majority of consumers across all generations: 76% of baby boomers and seniors, 53% of Generation Z consumers and roughly two-thirds of Gen X and millennials.
Separately, and as noted just this week, the Visa Global Travel Intentions Study showed wide awareness of the rising cost of travel — but consumers are unbowed. The payment
network estimated that 73% of Americans are aware of those increases, though just 6% of travelers plan to cancel or delay their plans.
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