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 2005 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:

• The monthly household expenditure on gas peaked in July 2008 at $289 and since then has declined to $177 as of April 2009.

• Monthly household expenditure on groceries is still on an uptrend year over year. April 2009 household expenditure on groceries stood at $359.

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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