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The macro trend that matters most for household spending in 2016—beyond the impact of the shift online—is a sustained and deepening letup in price inflation in many goods categories.
The biggest impact will come from food prices, which are forecast to decline slightly.
This means that:
- Households will be the biggest beneficiary. They will be able to keep their overall spending in check by capitalizing on flat or falling prices of goods, especially in food, to help offset prices of services that rise with a tightening labor market.
- Retail goods spending by households will hold at a steady pace at best. Growth in some categories and channels will slow—especially at food, drug, and mass retail stores—largely because of the impact of falling prices for food and other goods. See adjacent graphic and premium insights below for more.
- Services will lead household spending. Gains will skew toward health, wellness, travel, leisure, and home-related goods and services. Category growth will partly reflect the diverging needs and preferences of younger vs. older households.
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