Despite recent data showing inflation at around 2.5%, Georgians believe prices are rising much faster, with an average perception of 7.1%, according to a recent CardRates survey. This perception gap highlights a growing disconnect between reported inflation rates and how consumers feel its impact in their daily lives.
Just the Facts
• Perception vs. Reality: While the national inflation rate has fallen from a high of 9.1% in 2022 to around 2.5% currently, Georgians perceive it to be at 7.1%.
• State Comparisons: Mainers felt inflation the highest at 8.6%, while Kansans perceived it at 5.5%.
• Daily Financial Concerns: Nearly 42% of Georgians say they think about inflation “all the time,” with 34% thinking about it frequently.
• Future Expectations: A majority (64%) of Georgia respondents believe inflation will increase in the coming year, while only 12% expect it to decrease.
• Spending Cutbacks: The first cuts in a higher inflation scenario would be dining out (38%) and travel (30%), followed by subscription services and retail shopping.
• Unexpected Expenses: Grocery and utility bills led unexpected expenses for 38% of Georgians, followed by car and home repairs.
Why It Matters: The perception gap between actual and felt inflation is impacting how Georgians manage their finances. While prices have moderated from pandemic-era highs, the lingering feeling of high costs continues to shape spending habits. This perception influences consumers to tighten their belts, especially in areas like dining out, entertainment, and travel.
How Georgians Are Adapting: The CardRates study shows many Georgians are adjusting their spending as inflation remains top of mind. When asked what they would cut back on if inflation rose further, 38% said they would reduce dining out and entertainment, while 30% would limit travel. Subscription services and retail shopping were other areas Georgians felt comfortable scaling back if prices rose further.
Looking Forward: Although inflation appears under control by official data, many residents remain pessimistic. Sixty-four percent expect inflation to rise next year, while only 12% anticipate a decrease. However, some remain hopeful: 48% feel confident their finances will improve by 2025, while 28% feel neutral.
Context: Why Inflation Still Feels High: Georgians’ sense of inflation being higher than official rates may stem from the increased cost of daily essentials, from groceries to gas. While wages have risen, they haven’t kept pace with these price hikes for many households. The memory of high inflation during the pandemic may also contribute to a sense that prices are still surging, even as official figures suggest stability.
The Roll of Greedflation: “Greedflation” — the term used to describe inflation driven by companies raising prices beyond their own rising costs to boost profits — may significantly shape why Georgians feel inflation is much higher than official figures. Even as the Consumer Price Index shows moderate inflation, some companies continue to keep prices high or even raise them, attributing the increases to past inflation and supply chain issues. For consumers, this creates the sense that prices are rising without justification, feeding into the perception gap between actual inflation and what people feel.
How Greedflation Contributes to Inflation Perception:
• Price Stickiness: Companies that raised prices significantly during high-inflation periods may not lower them even as their own costs stabilize. This can lead consumers to feel the impact of inflation far longer, particularly for essential goods like food, utilities, and gas.
• Profit Margins Over Consumer Relief: Some corporations prioritize maintaining or increasing profit margins rather than lowering prices for consumers. This decision keeps prices high, intensifying the financial strain on residents and reinforcing the perception of high inflation.
• Psychological Impact on Consumers: When consumers notice prices rising faster than incomes, they may feel like they’re constantly losing purchasing power. This creates a sense of “everything is more expensive,” even if official inflation has slowed.
Industry Examples: Certain industries, such as groceries, utilities, and consumer goods, often see this phenomenon. For instance, grocery prices remain high, and utility bills have surged, yet these sectors have reported record profits in recent quarters. For residents, these steady or increasing prices on essentials reinforce the perception of high inflation — even if data shows inflation has technically cooled.
Expert Insight: Jon McDonald from CardRates.com says, “Our survey reveals that while inflation may have eased on paper, consumers are still feeling the pinch in their day-to-day lives. This perception gap between actual inflation and what Americans feel is driving significant changes in spending habits, as people prioritize essentials and look for ways to cut back on discretionary expenses. It’s a reminder that while economic data is important, understanding consumer sentiment is crucial to painting the full picture of financial well-being.”
Methodology: CardRates conducted the survey among 3,000 individuals from a double opt-in online panel, using stringent quality controls to ensure accurate responses.
