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Saturday, Jul 05, 2025

Inflation has stopped Americans from buying vehicles of all kinds — but they're still splurging on travel and good times

Inflation has stopped Americans from buying vehicles of all kinds — but they're still splurging on travel and good times

Despite US inflation at a 41-year high, people are still spending on travel-related expenses like flights and hotels.

Even though inflation is at a four-decade high, Americans are still spending big on travel and experiences.

The Consumer Price Index rose 9.1% over the year ending in June per data published this week, higher than the 8.6% over the year ending in May. The 9.1% rate — the highest since November 1981 — is affecting people's spending behavior.

Although some people are modifying how they spend their money like looking for cheaper alternatives amid high inflation, people are handing over lots of money on certain goods and services. Spending on travel and transportation has shot up this year, but on the other hand, people aren't spending as much on vehicles, consumer spending data shows.

The following chart shows the percent change from January 2022 to May 2022 in Personal Consumption Expenditures from the Bureau of Economic Analysis. The items and services in the chart are some of the things that have seen the largest percent increases in consumer spending during this period.


People are splurging on vacations and good times away from home despite higher prices, as travelers once again take part in "revenge travel." Expenditures on foreign travel were 68.4% higher in May than at the beginning of the year. Spending on air transportation is also almost 40% higher than in January. Additionally, people are spending more on accommodations as they buy hotel and motel rooms for their travel needs.

Monthly Personal Consumption Expenditures data is only available up until May. But with travel demand up as people vacationed for fourth of July and throughout the summer, it may be the case that travel continues to be a popular thing people dish out money on, even with the high costs consumers are facing.

Consumer spending for gas was also up in May from January, with a percent increase of 27.7% for gas and other motor fuel, mirroring skyrocketing gas prices over the last few months. However, Energy Information Administration and AAA data show gas prices have been coming down from their peak.

There are also goods and services that have seen personal spending decline from where they once were earlier in the year. As seen in the following chart, that includes various kinds of vehicles like motorcycles and new autos or light trucks.

People may not be willing to spend big on cars right now with monthly payments soaring. Data from Cox Automotive research shows the monthly payment for a car has reached a record high.


The above chart also highlights that spending is down from earlier this year for different kinds of repairs.

In general, people were spending more on services than goods in May — with spending on services rising $76.2 billion but falling $43.5 billion on goods from April according to the Bureau of Economic Analysis.

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