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BUSINESS Monday 6 June 2022
Inflation divide: The wealthy splurge, the poorest pull back

By ANNE D’INNOCENZIO have exhausted the sav-
and CHRISTOPHER RUGABER ings they’d built up dur-
AP Business Writers ing the pandemic in part
NEW YORK (AP) — Ameri- through stimulus checks,
cans at the low end of child tax credit payments
the income rung are once and higher wages, ac-
again struggling to make cording to calculations
ends meet. by Jeffries, an investment
A confluence of factors — bank. Americans’ bank ac-
the expiration of federal counts. The other four-fifths
stimulus checks and surg- of U.S. households are still
ing inflation on staples like sitting on a large stockpile
gas and food — are driv- of additional savings since
ing an even bigger wedge the pandemic, with much
between the haves and of that held by the top fifth.
have-nots. Inflation is playing out dif-
While wealthier shoppers ferently within businesses
continue to splurge, low- that cater to shoppers with
income shoppers have varying income levels.
pulled back faster than Michelle Gass, CEO of
expected in the past two Kohl’s, said some shoppers
months. They’re focusing are trading up to premium
on necessities while turn- brands like Tommy Hilfiger
ing to cheaper items or and Calvin Klein, while oth-
less expensive stores. And ers are going to lower-price
they’re buying only a little store labels.
at a time. Macy’s boosted its an-
It’s a reversal from a year or nual outlook based on
so ago when low-income In this image provided by the Northern Illinois Food Bank, Kisha Galvan and her grandchildren, the spending habits of its
pose for a photo after stocking up on food items from the Northern Illinois Food Bank on May 26,
shoppers, flush with money 2022, in Rockford, Ill. wealthier shoppers, but
from the government and Associated Press its customers with me-
buoyed by wage increas- dian household income
es, were able to spend But on the other end, the government said retail budgets and wiped away of $75,000 and below are
more freely. Walmart’s customers are sales outpaced inflation some of the wage gains, switching more to its off-
Kisha Galvan, a 44-year-old switching to cheaper for a fourth straight month, especially for those who price brand.
mother of eight children lunch meats and half gal- a reassuring sign that con- earn less. The national aver- The current environment is
from ages 9 to 27, was able lons of milk from full gal- sumers — the primary driv- age cost of a gallon of gas, making it difficult for retail-
to stock up on groceries for lons. Kohl’s, a mid-priced ers of America’s economy for example, has jumped to ers to pass on higher costs.
the week and buy extras department store, said its — are still providing vital $4.76 from $4.20 a month Macy’s, for instance, got
like clothing and shoes at customers were spending support and helping ease ago and a painful 56% from pushback after raising pric-
Walmart for her children less on each visit. And Gap concerns that a recession a year earlier, according to es on some casual clothing
last year. slashed its annual financial might be near. AAA. items and home accesso-
But without the pandemic- outlook, specifically citing But analysts believe even At the Northern Illinois Food ries.
related government sup- the strain from inflation at its affluent shoppers could re- Bank, which feeds people “We’re definitely seeing
port and inflation hover- low-price Old Navy chain. trench if the stock market in 13 counties including some balk at some of the
ing at a near 40-year high, Both Dollar Tree and Dol- continues to weaken. Mar- Galvan and her family, the prices,” Macy’s CEO Jeff
she is buying more canned lar General, which histori- shal Cohen, chief industry average monthly number Gennette recently told
food and depending on cally benefit from shop- advisor at market research of visits grew to more than analysts on the compa-
the local food pantry sev- pers trading down during firm The NPD Group Inc., 400,000 in the February ny’s earnings call. “We’ve
eral times a week instead difficult economic times, said the stock market af- through April period, from made adjustments there.”
of once a week. raised their sales outlooks fects higher income shop- 311,000 in the July through For the Northern Illinois
“I shop meal to meal,” said last month. Meanwhile, dis- pers “psychologically” and September period, ac- Food Bank — like many
the Rockford, Illinois, resi- counter Big Lots suffered more losses on paper could cording to president and food banks — food costs
dent who has lived on dis- steep sales declines in the make them cut back. CEO Julie Yurko. are spiking amid dwindling
ability for the past 15 years. latest quarter, noting cut- The spending mood has Across the economy, me- donations.
“Before, we didn’t have to backs in items like furniture. shifted from last October dian wages jumped 6% in “Inflation and rising food
worry about what we were “We are now in a new chap- and November, when the April from a year earlier, costs mean the food bank
going to get. We just go get ter where high inflation is Fed conducted a survey according to the Federal has to make tough choices
it.” greatly limiting the ability of and found that almost Reserve Bank of Atlanta. about our budget,” Yurko
The deep divide in spend- consumers to make discre- eight in 10 adults were ei- But even though that was said. “What foods can we
ing was reflected in the lat- tionary purchases, espe- ther “doing okay or living the largest increase since provide consistently and
est round of quarterly earn- cially of high ticket items,” comfortably” when it came 1990, it was still below the what foods can we only
ings for retailers. At the high Big Lots CEO and President to their finances in 2021, the inflation rate of 8.3%. provide if they are donated
end of the spectrum, Nor- Bruce K. Thorn told analysts highest proportion to say so Meanwhile, the poor- to us?”q
dstrom and Ralph Lauren late last month. “We know since the survey began in est one-fifth of Americans
reported stronger-than-ex- that many Americans now 2013. For those earning less
pected sales as their well- are once again living pay- than $25,000, the propor-
heeled shoppers returned check-to-paycheck.” tion that said they were do-
to pre-pandemic routines. The pullback among low- ing at least okay jumped to
Lululemon also reported income shoppers has not 53% from 40%.
strong quarterly sales of its affected overall spend- But inflation has taken a
pricey athletic wear. ing, which is still up. In April, bigger bite out of personal