American consumers are likely to dial back on trips to stores and restaurants this year as soaring inflation makes shopping more expensive, according to Target CEO Brian Cornell.
Cornell addressed the retail landscape during a Sunday appearance at a National Retail Federation event. He noted the rising price of gasoline and increased costs of everyday goods that should prompt Americans to seek cheaper alternatives.
“Some of the historical ways consumers react to inflation will play out again in 2022,” Cornell said, according to Bloomberg.
“You’ll drive fewer miles, you’ll consolidate the number of times and locations where you shop,” Cornell added. “You’ll probably spend a little more eating at home versus your favorite restaurant, and you might make some trade-offs between a national brand and an own brand.”
The Consumer Price Index surged 7 percent in December as businesses contend with widespread supply chain disruptions, shortages of key products and tight labor conditions. The inflation spike was the largest increase since mid-1982, according to the Labor Department.
Retail spending dropped 1.9 percent last month, much more than economists expected. Sales at restaurants and bars fell 0.8 percent for the month.
Cornell did not comment specifically on whether the inflation surge would affect consumer spending levels, though he noted the coming months would provide a key indication.
“We’re going to learn a lot about how the consumer reacts in the next 60, 90, 120 days to rising prices,” the Target CEO said.
As of Monday morning, the national average price of a gallon of gas was $3.31, according to AAA. That’s nearly $1 higher than the same day last year, when the average price was $2.39.
While gas prices ticked downward in December, some analysts have suggested they could eventually hit $4 per gallon.