Yahoo Finance's Ines Ferre joins the Live show to discuss Consumer Price Index (CPI) data and how consumers are responding to higher retail and food prices.

Video Transcript

BRIAN SOZZI: CEO after CEO is telling us here at Yahoo Finance they are raising prices on consumers because of labor inflation, transportation inflation, and commodities inflation. So is this latest inflationary wave sitting well with consumers? Yahoo Finance's Ines Ferre has been looking into this and joins us now. And Ines, I've been sharing all morning my deodorant story where I traded down because the brand that I was buying was just too darn much. They just jacked up prices too much. What are you hearing from your contacts?

INES FERRE: You're not the only one. I spoke to one woman, [INAUDIBLE] [? Murillo. ?] She owns a small business. She cleans houses. She has 14 houses that she cleans, along with her partner. And she said that she's seen a little bit of a service cutback in the sense of three of the 14 houses that she cleans are now cutting back on their hours for cleaning.

But as far as she's concerned, her own buying patterns are changing. We wanted to get an idea of how people's buying patterns are changing with this high inflation. And she's telling me when she goes to the grocery store, she has stopped buying meat, beef. She says she is now substituting that for chicken. She has changed her insurance for her house, for her car, to one that's less expensive.

She and her husband have now also cut back on their-- they've canceled their local newspaper, the "Norwalk Hour" in Connecticut. They are cutting back and they are not buying clothing. They haven't bought clothing for months. She says that this inflation is making her angry. I'm quoting-- "I'm angry. I'm angry at the government." She also says she doesn't understand how older people with fixed income can kind of cope with all of this inflation and also people that have children.

Now, as far as the data is concerned, I did speak to Omair Sharif from Inflation Insights, and he told me that people are reacting to higher prices on goods that have gone up by quite a bit. So for example, he highlighted the beef example. He said over the last six months, in real terms, adjusted for inflation, spending on beef products has gone down by more than 10%. Now they don't have data sets on per income, so if you're a lower income or if you're a higher income.

But just to give you a snapshot of what PayPal said in their last earnings last week, John Rainey, CFO, said the following. He said, we've seen weakness around spending in our lower income cohorts. This was a cohort that certainly benefited from stimulus in prior periods earlier this year. And we're seeing the effects of inflationary pricing around that, where there's a more elastic demand curve around that. So you're getting some snapshots, even though you may not have the actual data zeroed in. You're getting some snapshots as to how this is affecting people, consumers, across different income levels.

JULIE HYMAN: Well, there's a lot to unpack there, including the idea that is this now growing pushback going to mean that we are going to see deceleration in these price increases? That remains to be seen, obviously. But I want to zero in-- I know we did a Twitter poll.

But before that, I want to zero in on what she said-- I'm angry at the government. I find that so fascinating. And I think that's a fairly widespread sentiment, right? We just had President Biden actually commenting in reaction to CPI, acknowledging the pain that people are feeling. Why does she blame the government? I would love to hear if she explained to you that line that she's drawing.

INES FERRE: She did, and she basically said to me, since Biden came into office, she has seen the prices skyrocket. So she's correlating these price increases with the change in administration because she says, when he came into office, now we're seeing these big price increases. Now we have seen inflation going up for months now, but in her view, she's seeing the most acute inflation recently.

JULIE HYMAN: Very interesting stuff. OK, so let's get to that Twitter poll because that's also really interesting. You asked people more broadly what they're doing. Talk to us about the poll.

INES FERRE: Yeah, that's right. So we put out a Twitter poll on Yahoo Finance. We said, is inflation leading you to buy fewer goods and services related to housing, food, and gasoline? And you can see there that 50.7% said yes. 59.3% said no, just paying more money. There's no really getting around gas, food, and housing, because that makes up a big part of people's budget.

And in fact, Nielsen IQ also came out with a survey going into 2022 and basically said that this year, people are expecting to spend more on utilities, on groceries, on home basics, and they are expecting to spend less on discretionary items and going out and items outside of the home.

BRIAN SOZZI: Well, Ines, if my deodorant keeps going up in price, if it hits $20, I'm just not buying anymore. I'm going to start walking around with bars of soap under my armpits, just being real here. Ines Ferre here, top reporting as always. We'll talk to you soon.