Consumers adjust spending habits as inflation rises and energy costs surge

RALEIGH, N.C. (WTVD) -- A new report from the Bureau of Labor Statistics shows inflation continuing to climb, driven largely by rising energy costs tied to the ongoing war in Iran and the closure of the Strait of Hormuz.

The Consumer Price Index rose 4.2% year-over-year in May, the highest level since April 2023. Core inflation, which excludes food and energy, reached 2.9%, also marking its highest level since September 2025.

As summer travel approaches, consumers are already adjusting their spending habits to cope with higher costs. Vernon Tucker Jr. said he has been managing his spending.

"Pretty much know how to budget, to have money to spend and not worry about the expenses when I'm going out of town," he said.

Energy prices remain the main driver behind the increase, with higher fuel costs affecting both consumers and businesses. Tucker said his commuting costs have increased significantly.

"I'm traveling like 30 minutes to work, so my gas expenses for the month is more than what it has been over the last few years," he said.

According to AAA, the average price for a regular gallon of gas in North Carolina is $3.78, which is down from $4.17 last month, though still markedly above the $2.80 average from a year ago.

"I've seen that drop. I noticed yesterday that some gas back in Rocky Mount, where I'm from, Nashville, had gotten down to $3.69. That's probably 20 or 30 cents cheaper than what I've been seeing," Tucker explained.

Businesses are also feeling the strain.

"There definitely are inflationary costs coming in on beef, on chicken, on seafood, on some of the inputs that go in making like, you know, the cost of your tray, the cost of wax paper, the cost of condiments," said Isaac Horton, owner of Oak City Fish & Chips.

Food prices have seen mixed changes. Fish and seafood prices are up 6.5% year over year, while beef and veal are up 12.9% and coffee is up 17.5%. However, egg prices plummeted 35.2%, cheese and related items dropped 6%, and bananas fell 1.2%.

"You can buy in bulk. You can price out certain things for a certain period of time," Horton said.

Horton said their shift from a brick-and-mortar location to a full focus on food trucks has allowed him to lower overhead costs and reach more customers.

"We operate across about 40 different counties, across 90 different cities in North Carolina, and we serve about 100 to 200, sometimes 250 people (at each pop-up)," said Horton, who said their customer base has increased under this model.

He's increased advertising and giving customers more of a notice when he'll be in a particular location. Further, he's conducting market research while serving food.

"We're asking (customers) what do you think about this? Not only what do they want to see on their menu next, but what would have been a better location in this town? Is there something more centrally located? Is there an area in the city for food trucks already frequenting is more convenient for you guys at home?" he said.

Economists say the effects of the conflict overseas could linger even if conditions improve.

"Prices go up like a rocket, down like a feather," explained Gbenga Ajilore, Chief Economist at the Center on Budget and Policy Priorities. Ajilore served in the US Department of Agriculture during the Biden administration.

Even if the war in Iran were to come to an end, Ajilore explained delays in shipping could affect when prices would drop.

"It's going to be a couple of weeks before tankers can go through (the Strait of Hormuz). Then the question is, what happens in the economy and how does that impact the economy? So now we're looking at about four months to be able to get back to what we would call maybe normalcy," Ajilore said.

President Trump addressed the report, saying "the numbers were great," as he predicted prices would fall once the war in Iran ends.

"As soon as this war is over, you know I can say it now...you know we've been taking out millions of barrels of oil," said President Trump.

White House spokesperson Kush Desai further pointed to falling prices of prescription drugs, dairy products, cars, health and auto insurance, while acknowledging "temporary disruptions" from the war.

Ajilore said higher prices are already changing consumer behavior.

"While consumer spending has been maintained, the composition of that changed. We see a lot more people using credit. We see a little bit more of that buy now, pay later services. People while they're purchasing still food, they're kind of shifting to lower quality food or buying the store brand versus the name brand," he said.

The inflation data comes just days after a jobs report that exceeded expectations and included upward revisions for March and April. Meanwhile, financial markets have seen volatility in recent days, with the Dow, Nasdaq and S&P 500 all posting significant losses over the past week.