Defining a household or individual as “low-income” is a variable definition. It factors in a lot of things, such as household size, place of residence as well as the age of the household or family members. Usually, a good deciding factor on this within the US context is the government established poverty level. Government Departments utilize these definitions and guidelines to determine which members or families will be eligible for certain assistance programs.
Taking a bite out of the low-income situation
Lower-income U.S. households are cutting back on eating out, travel and pantry staples like diapers, soda and beer, as U.S. tariffs on imports are set to push prices even higher, said executives from Procter & Gamble PG. N, Coca-Cola KO. N and Chipotle Mexican Grill CMG.N. With a product range stretching from cleaning agents, skin care products to dietary supplements, Procter &d Gamble is quite a versatile company.
They have a global reach and a variety of products on their stock list. Consumers are increasingly seeking bargains, according to earnings reports and executive commentary from the past two weeks. Industry experts expect profit margins to shrink as companies find they can no longer rely on price hikes to boost revenue. U.S. President Donald Trump’s tariffs have already pushed up prices on some of P&G products, the company has said.
The tariffs, which importers are tending to pass on to consumers, are most likely to hit the poorest Americans worst, said policy researchers at the Budget Lab at Yale and the Foundation for Research on Equal Opportunity. Definitions of “low income” can vary widely and depend on the number of dependents or children in a household and where consumers live.
What is the dynamic behind “cheaper” shopping
Bank of America BAC.N, the second biggest U.S. consumer-facing bank, in research notes has described earners of $50,000 or less as “lower income,” and more likely to be living paycheck to paycheck. However, Chipotle, with its $10 burritos, has a benchmark of $75,000 or less. Coke has previously said “low-income” is less than $40,000 per year, while P&G did not immediately respond to questions about its definition.
Chipotle will consider the financial burdens on its lower-income consumers when weighing future price hikes, Rymer said. Consumer products bellwether P&G struck a cautious tone in its forecast for its upcoming fiscal year, saying shoppers across incomes were reining in spending due to Trump’s tariffs and immigration crackdown, along with rising interest rates and inflation.
Coca-Cola KO. N is marketing more affordable sodas to lower-income consumers, CEO James Quincey said, and brewer Molson Coors TAP.N added that such buyers are looking for smaller pack sizes. Canadian American multinational dink and brewing company Molson Coors Beverages was founded almost 20 years ago. With headquarters based in Chicago, Illinois Molson Coors acquired the Miller Brewing Company during 2016.
How is inflation hitting the job market
Consumers have been tightening their wallets as inflation ticks up and companies raise prices on everyday purchases like Hershey HSY.N chocolate and Tide laundry detergent. Cuts to federal food assistance programs are also looming. Savings consumers might have managed to sock away during the pandemic are now long gone.
Consumer caution is also reflected in big spending events such as back-to-school shopping, which is now underway, said Dana Telsey, analyst at Telsey Advisory Group. Packaged foods maker Kraft Heinz KHC.N said it does not expect an improvement this year, and is working to keep prices lower, including introducing value-sized packages. German shoemaker Adidas ADSGn.DE said it would have to consider the sales impact of higher prices, aimed at offsetting tariffs, on its sneakers.
Trying to survive in this current day and age with the higher cost of living, is difficult. In most instances, if inflation rises, the price of almost everything increases. This overall causes a huge problem as it starts to eat away at the purchasing power of the individual. It also affects the economy in a myriad of ways. In situations such as these, those with lower income tend to try and cut out on almost everything that can be deemed a “luxury” just to try and survive.
GCN.com/Reuters.