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Inflation Is High, But It’s Not Stopping People From Shopping And Racking Up Debt. Why Do You Buy?

Updated: Jun 17, 2022

For the full interview, watch

Rising prices have not curtailed people’s insatiable appetite for shopping. We are experiencing inflationary pressures globally; inflation in the euroZone is 8.1%. In the US, inflation hit a 41-year high of 8.5% in March. The inflation rate in Canada is officially 6.8%, the highest it’s ever been in thirty years.

Prices are rising for many reasons — the war in Ukraine, post-pandemic global economic growth, and quantitative easing by Central banks for far too long to avoid a financial catastrophe during the pandemic.

Whatever the reasons are, what is interesting is that, in most places, consumer spending is increasing more rapidly than inflation. Consumer Spending in the United States reached an all-time high of USD$13924.80 Billion in the first quarter of 2022!

Why are we spending like there’s no tomorrow?

So, why do we buy? Could it be pent-up demand caused by the pandemic? Statistics show that consumer spending dropped by about eight percent at the onset of the pandemic during worldwide lockdowns. Still, consumers adapted and went full speed ahead in the second year of the pandemic.

It’s not pent-up demand so much as easy access to cash and credit. Central banks have kept money from government assistance during the pandemic and interest rates intentionally low to avert a global slowdown.

The real reasons for why we buy.

I believe this underlies our insatiable appetite to shop. Studies on retail therapy have shown that many people shop to boost their mood.

A study by the University of Michigan found that shopping positively alters your mood by giving you a sense of control forty times more than if you were not shopping.

We buy primarily to avoid pain and seek pleasure.

Think about it.

What can you do about it?

Just as we’ve heard about retail therapy, we’ve also heard of buyers’ remorse. These do not have to be conflicting conditions. The same studies on retail therapy found that saving up for an item can give you something to look forward to, resulting in dopamine release over time. To avoid buyer’s remorse, use the cash you’ve saved instead of putting it on credit.

Coming to bite.

Unfortunately, the frantic consumer spending we are witnessing is driving household debt to unprecedented levels as more people use credit to feed their appetites. To combat rising inflation, central banks have no other way to go but raise interest rates, which will directly impact all forms of credit.

The pandemic caused a great deal of stress globally. That, along with government handouts and low-interest rates, has been the ingredients for the perfect storm of consumer spending as we all seek pleasure to avoid pain- even if it’s just temporarily.

Written by Jennifer Thompson

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