Rising Food and Housing Costs Drive US Consumers to Tighten Spending over the Next Six Months

U.S. consumer confidence rebounded in October after a sharp drop in September, driven by falling gasoline prices that offered households some financial relief.

However, with the cost of living including food, housing, and electricity remaining elevated compared to last year, consumers are expected to remain cautious about spending on services and durable goods over the next six months. 

October Consumer Confidence Rebounds, but High Cost of Living Persists

Consumer confidence showed signs of recovery, yet high daily living costs continue to strain many American households.

The Conference Board reported that the preliminary Consumer Confidence Index for September fell sharply by 6.7 points from August to 81.9, reaching its lowest level since April 2014. In September, high prices for gas, goods, and services paired with weak wage growth placed heavy pressure on routine household budgets. 

When retail gasoline prices declined in October, the Consumer Confidence Index bounced back to 91.7.

Although national regular gasoline prices dropped to approximately $4.25 per gallon as of October 28 compared to $4.48 the previous month, they remained higher than the $3.04 per gallon recorded during the same period last year, representing an increase of about 39.5%.

A majority of surveyed consumers expressed ongoing concern over elevated everyday expenses, particularly for food and energy.

In September 2026, the U.S. Consumer Price Index (CPI) rose 3.7% compared to September 2025, reflecting a faster pace than in August. Year-over-year data shows electricity prices increased 4.4%, prices for dining out rose 3.5%, shelter costs rose 3.2%, and food-at-home prices rose 1.8%.

These figures demonstrate that American households must spend more than last year to buy the same groceries and cover daily living expenses, leaving less room in their budgets for retail shopping, entertainment, and dining out. (bls.gov)

Consumers Scale Back Future Spending Plans

Surveys from The Conference Board indicate that consumers plan to reduce expenditure on services and durable goods over the next six months, with purchase intent for electronics like mobile phones, computers, and tablets trending downward. 

While retail and food services sales in September registered a month-over-month increase of 0.8% and a year-over-year gain of 6.3%, these metrics are not adjusted for inflation. This suggests that part of the top-line sales growth was driven by higher price tags for goods and services rather than stronger consumer intent, forcing shoppers to spend more out of necessity.

Persistent daily expenses are prompting U.S. consumers to tighten their budgets in the coming months, curbing spend on big-ticket or non-essential items like smartphones and computers. 

• U.S. E-Commerce and Brick-and-Mortar Retail Trends

Industry analysts widely forecast that online spending will remain strong through the holiday season, with e-commerce growing faster than overall retail and serving as the primary growth engine for holiday sales. 

However, consumers are increasingly strategic about their spending as the holiday shopping season approaches. A survey showed that 64% of consumers say they are likely to wait until Thanksgiving weekend promotions to do most of their holiday shopping, shifting away from early purchases in favor of major promotional events and discounts.

E-commerce remains the primary channel for holiday budgets due to pricing and value advantages. Still, channel preferences continue to vary by category, as consumers prefer brick-and-mortar stores for immediate or experience-heavy items like food and beverages, pet supplies, and home and kitchen products. 

• U.S. Restaurant Spending

While top-line restaurant sales continue to show surface-level growth, part of this increase stems from menu price hikes while customer traffic and visit frequency have not increased significantly. 

Restaurant industry research highlights that while consumers are no longer cutting dining budgets as drastically as before, overall sentiment remains cautious, with most consumers not increasing their dining frequency or per-visit spending. 

Although the year-end holidays are expected to trigger a seasonal bump in group dining and restaurant gift card purchases, broader economic pressures continue to compress overall consumer budgets for holiday activities compared to previous years. 

As consumers become more price-conscious, holiday competition also extends to inventory availability, delivery, and returns. For cross-border sellers, aligning stock levels with demand and coordinating fulfillment with promotional schedules can help manage costs while capturing sales opportunities within tighter household budgets.

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