Inflation Impacted Travel for the Lowest Income Group
The gap widened in 2023 between high income and low income groups.
Lower Income Classes Traveled Less this Summer
As Yodlee data show in Figure 1, the gap between spending on travel related expenses by the lowest income group(<$35K) compared to other groups widened in 2023. As other income groups stayed in sync with travel spending, the lowest income group exhibited reduced spending patterns. At its peak this year, in March 2023, the highest income group (>$150K) spent 50% more on travel than the lowest income group.
Income Spent on Necessities
The decrease in travel spend makes sense in light of greater inflationary pressure. According to a paper published by the Dallas Fed, inflation tends to affect lower income groups more than higher income groups. Low-income households spend a higher percentage of their income on necessities such as food, gas, and rent, which have higher-than-average inflation rate growth. In addition, low-income households have less flexibility to reduce spending when prices rise, as they are already consuming the cheapest products.1
Will this be a trend to watch in the future?
Check back in with us to see how the impact of inflation takes its toll on consumer spending.
About Envestnet | Yodlee Merchant, Retail, Shopper, and Spend Insights
Envestnet | Yodlee Merchant, Retail, Shopper, and Spend Insights utilize de-identified transaction data from a diverse and dynamic set of data from millions of accounts to identify patterns and context to inform spending and income trends. The trends reflect analysis and insights from the Envestnet | Yodlee data analysis team. By combining data with intelligence – connecting vast amounts of actual de-identified shopping data with state-of-the-art analytics and machine learning – Envestnet | Yodlee provides visibility into an entire set of shopping daily purchase behavior including, but not limited to, transactions, customer lifetime values, and merchant/retailer shares.
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