Are shoppers starting to pull back as Florida’s cost of living rises?

Makena Wininger has had to make some serious adjustments to keep up with the rising cost of living in Tampa Bay.

She moved in with her partner’s family in Land O’ Lakes after struggling to find another affordable apartment near her work. The 25-year-old was building credit card debt buying gasoline for her new hour-long commute to Tampa. Wininger said she also changed her diet habits to save money at the grocery store.

“Nine months ago, I wouldn’t have stood in the aisle as long as I do now to compare prices,” Wininger said.

Tampa Bay has seen some of the highest changes in cost of living nationwide during the pandemic — from soaring rents to double-digit inflation. After a booming economic recovery, retail experts told the Tampa Bay Times that consumers are getting hit by higher costs. Yet they’re still shopping.

“We’re focused on trying to keep the momentum on,” said Scott Shaley, head of the Florida Retail Federation. “We came out of Covid relatively unscathed and now we’re seeing [growth] slow down during this summer.”

U.S. retail sales were flat in July from the previous month, according to the latest Commerce Department’s report released Wednesday morning, but were up more than 10% from last year.

Inflation was highest in areas where most people are moving to, according to a report from real estate firm Redfin, as many new residents during the pandemic have higher incomes than the local population. The Tampa Bay area had inflation jump to 11.2% from last year, compared to the national average of 8.5%.

“Not everyone in the country is experiencing inflation the same way,” said Redfin deputy chief economist Taylor Marr in a statement. “It’s having an especially big impact in places like Tampa and Phoenix, which are attracting the most new residents and seeing double-digit increases in prices overall and even bigger increases in housing costs.”

The pressures of inflation and supply chain imbalances are hitting businesses too, Shaley said, and prices are getting passed on to the consumer. While inflation in the region slowed during the last two months (to 1.3%) from earlier highs, when inflation every two months would be the typical amount seen in a whole year (2%), it was mostly led by gas prices falling while food and shelter costs continued to rise.

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The pressure of rising costs has fueled worries of a recession, yet the National Bureau of Economic Research hasn’t called for one yet.

The national economy measured by gross domestic product shrank for two straight quarters as the Federal Reserve raised interest rates to combat inflation. But a strong jobs market has been surprising economists with unemployment falling to pre-pandemic lows. Florida’s unemployment rate fell to 2.8% in June, according to data from the Bureau of Labor Statistics, the same as it was back in January 2020. Shaley said he hopes that it’s a sign that if a recession does hit, it won’t be as painful.

There is also some relief coming for consumers, retail experts noted. Gas prices have fallen and some big-box stores have overstocked their inventories to avoid shortages, resulting in more discounts and sales.

“There’s a disconnect right now that we’re all noticing,” said Brian Bern, managing director of retail tenant representation at Tampa-based brokerage Franklin Street. “Inflation is crazy high, yet consumers continue to shop.”

There’s more shoppers going to stores, likely because there’s more residents in Tampa Bay, Bern said. Some local shopping centers are continuing to see growth while others are pulling back. Tampa’s International Plaza saw 8.26% fewer people in the mall during July compared to last year, according to foot traffic data from Franklin Street. Westfield Brandon’s foot traffic was down 7%, while St. Petersburg’s Tyrone Square was up 3% and Clearwater’s Countryside Mall was up 7.1%.

While people are still shopping, how they’re shopping is shifting.

Many customers are now more likely to experiment with other brands to seek better values, said data analyst Sean Murphy at St. Petersburg-based retail marketing firm Catalina. Even the highly-loyal customers, who businesses typically consider as reliable sales, are looking elsewhere for deals.

“We’ve seen the value seekers can be as high as 50% of sales in the high loyal segment. That represents lots of buyers.“ Murphy said. “The concept of loyalty has been really stressed in the change of the economy.”

The cheaper store-branded items are seeing sales go up, according to Catalina’s data. So are prepared foods as people cut back from dining out. Store-branded baking mixes sales have gone up 40%, soups 17% and prepared foods at 12% this year.

“It’s not just one brand, but the customer’s total basket is going up too,” Murphy said. “Income is not rising as quickly and they’re feeling the pinch.”

Wininger, who moved from Tampa this year, said she switched from fresh produce to frozen vegetables when shopping at the grocery store. As a chef, she cooks a lot more than the average person but said she had to start cooking more simply. She started buying less proteins and cut meat from her meals at least once a week.

When Wininger first moved to Tampa in 2019 from Oklahoma, she said it wasn’t nearly as expensive as it is now. Her income doesn’t go as far as it did before.

“It’s not that Tampa Bay isn’t doing well, it’s doing well with the higher-income stratosphere of people,” Wininger said. “The lower parts of the income bracket are forced to consolidate.”

The Tampa Bay Times has a team of reporters focusing on rising costs in our region. If you have an idea, question or story to tell, please email us at costofliving@tampabay.com.

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