By Katabella Roberts
The data come as the overall pace of annual inflation eased to 6.4 percent in January, down slightly from 6.5 percent in December 2022, according to the Bureau of Labor Statistics (BLS).
However, that was still higher than the 6.2 percent economists had anticipated and was up 0.5. percent month over month, while the cost of food remained stubbornly high.
According to the latest data (pdf), 27 percent of U.S. households within the past year reported taking money out of their savings because of their financial situation, while 54 percent have used their savings to pay for everyday expenses such as utilities, food, and rent.
Another 35 percent said they have dipped into their savings to pay for an “unexpected expense,” while 31 percent said they did so to pay off debt.
The data were based on a nationally representative sample of 1,029 general population adults aged 18 or older and was conducted between Feb. 3 and Feb. 5, 2023, by Ipsos, using the probability-based Knowledge Panel.
According to the study, millennials are more likely to be feeling the squeeze of inflation on their finances, and are thus taking more actions to save or make money,
“Millennials are more likely to have taken money out of their savings, put less money in their savings or investments, or delayed a major purchase or vacation,” the study authors wrote. “Both Gen Z and millennials are more likely to have borrowed money from friends and family than Gen X or baby boomers.”
Food Prices Still on the Rise
The latest study comes after BLS data published earlier this month showed that the cost of food at grocery stores rose 11.3 percent year over year in January, while food “away from home,” such as at restaurants, cafeterias, and mobile vendors, rose by 8.2 percent.
Staple items, including eggs and bread, rose across the board, while rice and pasta were up 49 percent year over year.
Meanwhile, average hourly earnings fell 0.2 percent in January and were down 1.8 percent year over year, according to a separate BLS report that adjusts wages for inflation, meaning that for Americans, earnings are still not keeping up with the increased cost of living.
According to a survey published in January by Pymnts and LendingClub, the number of Americans living paycheck to paycheck has increased over the last year, with 64 percent of consumers now living spending all their money before their next pay date, marking 9.3 million more than the year before.
In addition, 27 percent of consumers believe their personal finances will get worse this year as prices continue to soar, the study found.
Despite many households seemingly having to dip into their savings amid growing costs, the Biden administration continues to cut an optimistic tone when it comes to the U.S. economy.
During the president’s State of the Union address earlier this month, he noted that the United States is “better positioned than any country on Earth” to combat soaring prices, which he attributed to supply-chain issues, the COVID-19 pandemic, and Russia’s invasion of Ukraine.
“We have more to do, but here at home, inflation is coming down. Here at home, gas prices are down $1.50 a gallon since their peak. Food inflation is coming down. Inflation has fallen every month for the last six months, while take-home pay has gone up,” Biden said.