About one in three U.S. consumers (32 percent) have already significantly reduced discretionary spending because of the rise in gasoline prices, according to the monthly RBC Consumer Outlook Index.
With the national average price about $3.20 gallon at the time the survey was conducted (Feb. 25-28), another one in five (18 percent) say they will reduce spending if the price climbs to $3.75 a gallon. Four in 10 (41 percent) place their pain threshold at $4 a gallon.
"There has been quite a lot of debate about the impact of rising gasoline prices on consumption in general," said Tom Porcelli, RBC Capital Markets' chief U.S. economist, in a statement.
"Specifically, the conversation focuses on what particular price level of gasoline would lead to a shift away from discretionary spending. The RBC survey finds that this level has already been breached for 32 percent of consumers and is within range for another 18 percent," he added. "Somewhat encouragingly, however, is that 40 percent of Americans place their threshold at or north of $4 per gallon."
The survey found growing concerns about inflation. Consumers expect that higher raw material costs will drive even greater price increases in the sectors that already give them the most trouble.
Nine in 10 consumers (93 percent) expect to see higher oil and gasoline prices and 90 percent expect to see higher food and grocery costs.