NEW YORK The Deloitte Consumer Spending Index dipped slightly in December primarily due to a decline in real wages, but it remains near its highest level since 2004.
"The most notable shift in the index results from inflation, primarily due to rising energy prices, which is undermining the gains in real hourly earnings," said Carl Steidtmann, chief economist with Deloitte Research, a subsidiary of Deloitte Services, and author of the monthly index. "This increase in prices is offsetting the improvement in other components of the index that boost consumer purchasing power, including a steadily falling tax burden, a sustained drop in initial unemployment claims over the past several months and signs of stabilization in the housing market."
The index, comprising four components -- tax burden, initial unemployment claims, real wages and real home prices -- slipped to 4.63%, from an upwardly revised gain of 4.66% a month prior.
"Inflation can significantly change the pricing environment for retailers, particularly at a time when consumers are already closely monitoring their spending levels," said Stacy Janiak, vice chairman and Deloitte's U.S. Retail leader. "Retailers that have been focused on lowering product costs and preserving margins should keep their foot on the pedal to maintain and accelerate those efforts given the prospect for continued inflationary pressure. Efforts to seek out less-costly product and supply alternatives, grow private-label offerings and identify greater supply chain efficiencies should remain high on retailers' lists of resolutions for the new year."