Higher gasoline and food prices are continuing to drive up consumer spending for necessities and reducing both spending on discretionary items and savings, according to Discover Financial Services.
The Riverwoods, Ill., credit card company said Wednesday that its Spending Monitor index rose 1.4 points in May from a month earlier, to 86.8. The index was pegged at 100 when it was introduced last year.
The percentage of consumers who reported spending more rose 6 points, to 56%. The percentage who expect to spend more this month also rose 6 points, to 46%.
Discover said record gas prices were the most important factor in spending; the percentage of consumers who said they are now spending $200 or more each month on gasoline rose almost 13 points from a year earlier, to almost 36%.
Higher gas prices also drove down spending in other categories, Discover said. A record 54% of consumers said they would spend less on discretionary items this month, while 59% said rising energy costs had caused them to change their summer vacation plans.
A record 42% of consumers said they are putting less into savings and investments.
The percentage of consumers who say their personal finances are getting worse rose 10 points from a year earlier, to a record 54%.
Margo Georgiadis, executive vice president and chief marketing officer for Discover, said in a press release that people "have shifted their spending emphasis from 'wants' to 'needs' " in response to the poor economic environment.
"It seems clear that U.S. consumers are no longer choosing to spend more, but are being pressured to spend more due to record high oil and food prices," Ms. Georgiadis said