Consumers Change Lifestyle to Cope With High Prices

Consumers are being forced to change their spending habits as prices for essential items such as gas and food shoot up, according to studies from the United States, U.K., and Canada.
Consumers Change Lifestyle to Cope With High Prices
5/24/2011
Updated:
10/1/2015
<a><img src="https://www.theepochtimes.com/assets/uploads/2015/09/114175423.jpg" alt="A prices board is pictured at a gas station in Strasbourg, eastern France, on May 10, 2011. The prices of the domestic gasoline beat a new historic record in France, reaching 1.5492 euro/liter, about $8.24US/Gallon.  (Patrick Hertzog/Getty Images)" title="A prices board is pictured at a gas station in Strasbourg, eastern France, on May 10, 2011. The prices of the domestic gasoline beat a new historic record in France, reaching 1.5492 euro/liter, about $8.24US/Gallon.  (Patrick Hertzog/Getty Images)" width="575" class="size-medium wp-image-1803626"/></a>
A prices board is pictured at a gas station in Strasbourg, eastern France, on May 10, 2011. The prices of the domestic gasoline beat a new historic record in France, reaching 1.5492 euro/liter, about $8.24US/Gallon.  (Patrick Hertzog/Getty Images)
Consumers are being forced to change their spending habits as prices for essential items such as gas and food shoot up, according to studies from the United States, U.K., and Canada.

A nationwide Nielsen Company survey shows Canadians now spend almost the same amount on fuel as on food. Monthly gas expenditures were three-quarters that of grocery bills.

In Canada, consumer prices increased 3.3 percent over the 12 months ending in April. Energy prices surged and store-bought food rose by 3.7 percent. The most affected food items were staples such as meat, bakery products, and fresh vegetables.

But gas prices in Canada were the main culprit by far, jumping 26.4 percent since last year. Prices across the country range from CA116.4 cents per liter (US$4.41 per gallon) in Edmonton at the low end, to CA135.2 cents per liter (US$5.12 per gallon) in Vancouver at the high end, as of May 23.

Canadians are suffering under the price increases. A poll by Ottawa-based Abacus Data found that nearly 40 percent of Canadians said rising gas prices had “really hurt” their budgets. To get by, they have sacrificed non-essential driving, vacations, general household spending, and entertainment. In fact most Canadians, 86 percent according to Nielsen, report changing their driving and shopping habits to absorb the price hikes.

Insolvency group R3, the Association of Business Recovery Professionals, found a similar situation in the U.K., where 80 percent of consumers reported changing spending patterns in the last 12 months as food and fuel prices have continued to rise. Most said they have cut back on non-essential items, and are more likely to shop around for lower cost items today than 12 months ago.

Jason Toews, founder of Gasbuddy.com, a website that helps consumers find the best deals on fuel across North America, says people are desperately trying to cut back on driving costs.

“People have been taking public transportation more, riding bikes more, walking to work or car-pooling. A lot of people are doing that,” he says.

According to a recent Gallup poll, if gas prices remain in the $5 per gallon range, one in three Americans—irrespective of income or their perception as to whether high gas prices are temporary or permanent—say they will buy a more fuel-efficient car

Of the respondents who said recent gas price hikes are causing them “severe” financial hardship, 44 percent are likely to buy a more fuel efficient car. Only 25 percent of those not experiencing hardship said they’d be more likely to buy a fuel-efficient car.

If gas prices keep rising, it will be good news for mass transit operators. Almost one-third of lower income Americans, making $30,000 a year or less, say they will use mass transit if gas prices reach the $5 range. Only 11 percent of people in the $75,000 or more income bracket said they would do likewise.

The Abacus Data poll found most Canadians blame “greedy” oil and gas companies for the price increase, and nearly 80 percent of respondents “strongly support” (52 percent) or “somewhat support” (24 percent) government intervention.

Toews, however, warns against it, saying that regulation doesn’t necessarily mean lower prices at the pump.

“One of the things that happens when government starts to regulate gas prices is gas prices actually start to go higher,” says Toews, citing examples from several Canadian provinces.

He says regulation would lead to increased prices at the retail level, which would ultimately fall on consumers.

Toews recommends consumers “fight back” by finding the lowest prices through services such as Gasbuddy.com, because the demand for low prices will force gas companies to remain competitive.