Consumer Says: High Prices Are Still Consumers’ Top Concern

What's new in the economy?

The unemployment rate edged up slightly to 4.1% in February 2025. The average weekly hours of all employees (total private) remained at 34.1 hours. The last time hours were this low was when the pandemic started five years ago. At the same time, the number of people employed part-time for economic reasons increased by 460,000 to 4.9 million in February. Although the unemployment rate is still low, lower hours and a higher share of people out of full-time employment due to economic reasons point to building slack in the labor market.

There were glimmers of good news in the Job Openings and Labor Turnover Survey (JOLTS) data yesterday as firings fell and people quitting their jobs grew ever so slightly. However, the market's expectation for the February release is more pessimistic, as it could reflect government layoffs and businesses holding off hirings amidst economic uncertainty.

The topline February Consumer Price Index figure released this morning was below market expectations. Month over month, prices grew 0.2% in February, moderating from January's 0.5% increase. Nevertheless, services inflation continues to be sticky, rising 4.1% year over year, and there is an upward risk for commodity and goods prices with tariffs in place or on the horizon.

Consumer says...

Now on to Sofia Baig's latest report on inflation … if you prefer listening, you can stream our latest episode here. In case you prefer text, here’s a preview of what we discuss this week:

Although inflation has eased considerably from its highs in mid-2022, prices remain consumers' top concern. Grocery and food prices are at the top of the list, followed by inflation broadly, housing costs, and gas prices. Prices for groceries have grown 27.8% in the past five years or since their pre-pandemic level. The high concern levels reflect that pre-pandemic prices remain a common mental benchmark, especially for commonly purchased items where price recollection is strong.

The increase in concern was broad-based, affecting GenZ adults, Baby Boomers, and all income cohorts. Democrats had the largest increase in the share, reporting that they are very concerned with grocery prices, while Republicans were one of the few groups to be less concerned, as partisanship continues to color many consumers’ views of the economy.

What would consumers like to see when it comes to prices?

When asked if they would rather prices go down or their income go up, consumers were more likely to say they would prefer prices to go down (61%). Although the share has decreased slightly since 2023, the decline is within the margin of error, suggesting that consumers want price declines today as much as they did over a year ago.

However, a sustained reduction in the level of prices, also known as deflation, rarely occurs as prices generally go up over time. In addition, reduced prices are usually caused by an economic slowdown. When prompted by this information, most consumers said they would rather prices stay the same instead of the economy going into recession; however, 35% still would rather prices decline, implying that perhaps close to a third of the population does not feel they would be affected by the economic downturn but could still reap the benefits of lower prices. Read the full report here for more analysis on what this means for the U.S. economy going forward.

Further reading: 

• This morning, ahead of the CPI release, we also released our latest analysis on the U.S. Inflation and Supply Chain indexes here. Grocery prices are not the only concern for consumers.
• Partisanship is showing up more clearly in the latest economic data. We took a look at the partisan divide on consumers' personal finances and discussed what this gap means for consumer spending here.
• As another cohort of young graduates prepares to enter the workforce in the spring, their job prospects are not looking great. More on what adult Gen Zers should expect this spring as they job hunt here.

… Stay tuned, and we’ll be back with more economic insights & research updates in two weeks.