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Inflation is keeping some consumers from spending, but that isn’t the case for all shoppers, according to Citigroup CEO Jane Fraser.
Fraser told CNBC in an interview that the banking firm has noticed a “K-shaped consumer,” where some are pinching every penny and others are waiting for brands to excite them into spending.
“A lot of the growth in spending in the last few quarters has been with the affluent customer,” Fraser said. Meanwhile, “we’re seeing a lot more cautious low-end income consumers,” Fraser, who leads one of the top credit card issuers, added.
“They’re feeling more of the pressure of the cost of living, which has been high and has increased for them,” Fraser said in reference to low-earning consumers. “While there is employment for them, debt servicing levels are higher than they were before and so they’re being mindful of their spending.”
Even in today’s robust labor market, inflation remains elevated. And against a high interest rate environment, consumers are “feeling more of the stress,” to pay for everyday essentials, including rent, Fraser said.
“I think, like everyone here, we’re hoping to see the economic conditions that will allow rates to come down sooner rather than later,” she added.