Food & Fuel Cost Tracker

This brief report looks into a unique sliver of the economic spectrum. These are consumers with credit scores less than 600, gross household income about $40,000 per annum and on average have 2.7 people in the household. Most of them will fall in the subprime bucket. Facing financial distress, owing to either being over obligated on debt that they have taken, unemployment or relationship issues, these clients have approached Consumer Credit Counseling Service of Greater Atlanta for financial counseling.

Analyzing family budgets from January 2001 to June 2008, we decided to closely scrutinize the monthly expenditure on core necessities i.e. expenditure on food and fuel. The following are some trends:

• 2008 till date has the highest month-wise expenditure on gas and groceries
  

• The trend is an increasing one
  

• Food and fuel expenditure in 2008 is well above the 2007 trend line
  

• The expenditure on food and fuel in June 2008 versus June 2007 shows a 16.5% increase

The present travails in the economy—threat of a recession, growing inflation and increasing unemployment rates—will further stress household budgets. CCCS, though its unique financial counseling work, sits at the gateway of growing consumer distress.

The increasing strain on household budgets is reflected in the monthly expenditure on food and fuel. Looking into the future, some very interesting questions will be raised:

• Will further reduction in the Fed interest rate create inflation that can further strain household budgets?
  

• Will there be a reduced appetite for debt as households may not have enough disposable income to service their debt?

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