Americans are suffering from 'sticker shock' — here’s how to adjust Setting a spending plan can help with the stress of high prices
After years of inflation, most Americans are experiencing sticker shock, a recent report found
Whether it's a dozen eggs or a new car, Americans are having a hard time adjusting to current prices.
Nearly all Americans report experiencing some form of "sticker shock," regardless of income, according to a recent report by Wells Fargo.
In fact, 90% of adults said they are still surprised by the cost of some goods, such as a bottle of water, a tank of gas, dinner out or concert tickets, and said that the actual costs are between 55% and 200% higher than what they expected depending on the item.
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Many Americans are still cutting back on spending, making financial choices and delaying some life plans, the Wells Fargo report also found. The firm polled more than 3,600 consumers in the fall.
"The value of the dollar and what it is providing may not be as predictable anymore," said Michael Liersch, head of advice and planning at Wells Fargo. As a result, "consumer behaviors are shifting."
Still, adjusting to a new normal takes time, he added: "Habit formation does take a while. Next year what you can imagine seeing is consumers being a little less surprised or shocked by prices and adapting to the current situation to create that goals-based plan."
Some change is already apparent. Although credit card debt recently notched a fresh high, the rate of growth slowed, which indicates that shoppers are starting to lean less on credit cards to make ends meet in a typical month, according to Charlie Wise, TransUnion's senior vice president of global research and consulting.
"After years of very high inflation, they are kind of figuring it out," Wise said. "They've adjusted their baseline for what things cost right now."
But with President Donald Trump's proposed 25% tariffs on imports from Canada and Mexico set to take effect in March, there is also the possibility that prices will rise even further in the months ahead.
Consumers fear inflation will pick up
Mexico and Canada tariffs could put pressure on some consumer staples, experts say. That includes already high grocery prices, which are up 28% over the last five years, according to the Bureau of Labor Statistics.
The prospect of tariffs and renewed inflationis weighing heavily on many consumers.
The Conference Board's consumer confidence index sank in February, notching the largest monthly drop since August 2021. The University of Michigan's consumer sentiment index similarly found that Americans largely fear that inflation will flare up again.
A recent CreditCards.com survey found that 23% of Americans expect to worsen or go into credit card debt this year, in part because they are making more purchases ahead of higher tariffs.
How to battle sticker shock
Consumer savings expert Andrea Woroch recommends setting a spending plan and tracking expenses. That helps you pinpoint wasteful purchases and those where prices are accelerating and take steps to save.
"Write out all your expenses currently from those essentials and the wants, figuring out an average monthly spend for fluctuating categories," she said. "Once you have it all listed out, you can begin hacking away at unnecessary purchases or at least set goals for reducing in those nonessential categories."
Identify triggers that lead to impulse purchases to help dodge them in the future, Woroch also said. "If you can't resist a sale, then unsubscribe from store newsletters and turn off push notifications in deal apps."
Ultimately, being more in control of your spending will "reduce the stress that comes with worry about how you're going to afford higher prices," Woroch said.
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This story originally appeared on: CNBC - Author:Jessica Dickler
