As gas prices shoot sky high, drivers conserve funds by cutting spending on other items, according to a new survey by the National Retailers Federation (Consumers Stung by Record Gas Prices, by Chris Isidore, May 18, 2007, CNNMoney.com).

 

According to motorist group AAA, gasoline prices have hit a sixth straight record high, with prices reaching $3.129 per gallon of self-serve regular unleaded. The survey, based on findings at up to 85,000 gas stations, indicates a jump from the prior record-high price of $3.114. The group forecasts a price increase to $3.25 per gallon over the next 2 months, leading to an expensive summer at the pump.

 

The rising gas prices are of great concern for store chains, according to the NRF. The retailers’ trade group survey found that the average consumer believes that the price of gas will rise to a whopping $3.32 per gallon by Father’s Day.

 

The survey reports that as a result of the climbing gas prices, 40.2 percent of consumers are taking fewer shopping trips, 37.9 percent plan on shopping locally, 30.7 percent plan on shopping the sales more often, and 23.5 percent are using more coupons.

 

Items that consumers are spending less on to save money include clothing (24.1 percent), and dining out (31.1 percent). One in five consumers reports holding off on major purchases, like a car, television, or furniture, due to mounting gas prices.

“Consumers are entering the summer season with a cautious view of increasing gas prices," NRF President and CEO Tracy Mullin said. “To offset the effects of higher prices, more consumers are giving their wallets a little extra cushion by cutting back on discretionary spending or choosing to frequent retailers closer to home.”

Kelley Blue Book, the famous auto industry resource, reports similar results of its consumer survey, but focused its study on new vehicle buyers. Of this population, half state that they are spending less on retail items like clothes and shoes, more than a third plan on dining out less often, and another third plan on buying less media entertainment items, “as long as gas prices continue to squeeze their wallets.” The report also states that the summer may see a decline in “luxuries like a night on the town, music sales, as well as movie ticket sales.”  (Latest Study Shows High Gas Prices Affecting Consumer Shopping Behavior, May 18, 2007, PR Newswire.com).

In addition, some Americans are reassessing their auto buying choices, with 41 percent of in-market new vehicle shoppers stating that the rising gas prices are influencing their decisions, stating that “if gas prices rise an additional 25 cents above current

levels, they…will start researching vehicles they would not normally

have considered.” 

 

“These results make it clear that American consumers are more than willing to make changes in their buying decisions due to rising gas prices," said Jack R. Nerad, executive editorial director and executive market analyst at Kelley Blue Book. "This will have negative implications for the domestic manufacturers as they are perceived as building low mileage vehicles and will therefore be an issue the new ownership of Chrysler will have to deal with immediately to assist in the turn-around of that company.”

 

However, not all potential buyers are fazed; 27 percent maintained that the recent gas price hike has had “little or no effect” on their vehicle choice, while 14 percent state that they were planning on buying a fuel-efficient vehicle in any case.