Record high inflation under Democrat President Joe Biden’s economy — especially in the energy and food categories — is steering consumers away from expensive sustainable products and toward cheap alternatives.
In its guide on global recession the Conference Board, a global think tank, indicated that the consumers who are typically “most enthusiastic” about using more sustainable products — millennial, urban, and Hispanic consumers — are now buying such products less because of the record high inflation.
The board’s consumer research senior researcher, Denise Dahlhoff, wrote in another report that products with environmental or social sustainability were usually priced higher than the regular product by nearly 30 percent in 2021 and the first half of this year.
Additionally, earlier this month, it was reported that Consumer prices continued to climb in October, with the CPI up 7.7 percent in October when compared to 12 months ago, as core prices eased. The core prices, a key measure of inflation when excluding food and energy, was up 6.3 percent from a year earlier.
As the prices of environmental and social sustainability products rise, it could create a substitution effect where consumers switching to cheaper alternatives could spur “innovations to save both cost and the environment—and enable more accessible prices.”
For example, the Conference Board noted:
…recycling remnants of older products to create new ones, making operations more efficient, using wastewater for heating and cooling, replacing virgin with recycled materials, and using less packaging can save money—and even add revenue by reaching additional buyers to whom such products and practices appeal. Furthermore, novel business models such as renting, sharing, and secondhand provide consumers with more price points, while benefiting sustainability.
The board’s executive summary suggested ways that the businesses could foster the use of sustainable products with new pricing models and transparent price communications:
First, pricing decisions should take into account other corporate benefits that come with offering sustainable products, including higher productivity from committed employees motivated by a company’s sustainability agenda, employees’ acceptance of lower pay in return for a meaningful job and lower turnover, and improved ability to attract desirable investors and suppliers. Secondly, in tight financial conditions, customers may appreciate payment models that spread charges over time or that offer flexible prices. Finally, breaking down cost components and margins for sustainable products as compared to traditional ones can make prices more plausible, potentially fostering price acceptance and lowering negative reactions. It could help customers understand what their payment is covering and in what portions, including the sustainability features, and what companies are earning. [Emphasis added.]
This all comes as the most recent Gallup poll showed the economic confidence level fell in October, which ultimately undid the small climb that was seen over the three previous months. The poll showed that the economic confidence index was at minus 45, after being minus 39 the month prior.
Breitbart News Economics Editor John Carney explained that before the pandemic, in February 2020, the economic confidence index was at positive 41 before it plunged to minus 32 in April. He also noted that the index was briefly in the single digits in the spring of 2021 before falling again due to concerns about inflation.