How Rising Prices Are Reshaping Consumer Spending in 2025

Consumer Spending Shifts Due to Rising Prices and Tariffs

As inflation and new tariffs continue to impact the economy, consumer spending habits are undergoing significant changes. According to PYMNTS Intelligence, 65% of U.S. adults were living paycheque-to-paycheque as of March 2025, with 22% struggling to pay monthly bills.

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Spending Priorities Adjusted

Despite financial pressures, certain product categories remain resilient. Personal care and child-related expenses, such as extracurricular activities, are among the least likely to be cut, even with price increases. Only 5.1% of consumers who had a manicure in the past year would forgo the service if prices rose. Similarly, just 2.9% of parents would eliminate spending on their children's extracurricular activities.

In contrast, discretionary spending on items like designer clothing and vacations is more susceptible to reductions. Approximately 42% of consumers are likely to buy less designer clothing, and 7.1% would stop spending on vacations if prices doubled.

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Financial Stability Influences Spending Behaviour

Consumers not living paycheque-to-paycheque are more likely to maintain their purchasing habits amid price increases. Specifically, 31% of financially secure consumers reported they would continue buying at their current quantity and frequency, compared to only 13% of those struggling financially.

This disparity highlights the "economic resilience gap," where financial security significantly influences consumer price sensitivity. Paycheque to paycheque consumers are more inclined to seek cheaper alternatives or reduce the quantity or frequency of their purchases when prices rise.

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Price Sensitivity Thresholds

A critical point is reached when prices rise by 10%. Nearly 52 million consumers would stop purchasing certain goods or services at this threshold, including technology, groceries, dining out, household items, and personal care products. An additional 11 million would cease purchases if prices doubled, totalling 62.8 million individuals who would cut back significantly.

Interestingly, financially struggling consumers are less likely to give up retail memberships, such as those from Costco or Amazon Prime, compared to financially secure consumers. This suggests that membership-based savings models provide essential economic utility to financially vulnerable households.

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Implications for Businesses

Understanding these shifting consumer behaviours is crucial for businesses. Companies should consider the price sensitivity thresholds and the economic resilience gap when strategizing pricing and product offerings. Focusing on essential services and value-driven products may help retain customers during economic fluctuations.

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For a more detailed analysis, refer to the full PYMNTS Intelligence report: PYMNTS.com

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