Rising fuel and food prices have erased the impact of the $92 billion in government stimulus checks distributed so far, according to Franklin-based research firm IHL Group.
According to IHL Group, fuel and food prices have risen by $132.4 billion over the past year, and consumers are putting the stimulus money toward debt reduction and basic needs instead of big screen TVs and chai lattes.
Despite a recent drop, fuel prices have been particularly painful for retailers, casual restaurants and auto dealers.
"Every sustained one-cent increase in fuel prices takes $1.7 billion a year out of U.S. consumers’ pockets," said Greg Buzek, president of IHL Group. "Sales lost to the retail economy in the past year due to a sustained rise in gas prices equates to the combined annual revenues for Kroger and Target."
However, the recent dip in fuel prices could revive the wilting retail market. Buzek said the lower fuel prices will release $3.4 billion that consumers can spend elsewhere, and the timing couldn’t be better — the much-needed shot in the arm coincides with the crucial back-to-school shopping season.
"Those retailers that have adjusted their inventories and coordinated their marketing accordingly are best positioned to benefit,” said Buzek.