ALEXANDRIA, Va.—Consumers are continuing to pull back on spending amid inflated prices and economic uncertainty, according to research from Morning Consult. Although incomes and savings rates are showing signs of recovery, expenses and credit card balances are higher than last year. Morning Consult found that real spending was down 1.3% in April, continuing a three-month downward trend. Consumers are spending less on services, durable goods and nondurable goods.

Dining out and travel-related expenses, including hotels and airfare, are down after two consecutive months of large year-over-year declines. The slip in spending may be partially due to high prices, as Morning Consult’s Substitutability Index score for vacations and travel has also increased for all income groups, which shows that consumers are more likely to trade down to cheaper alternatives on higher-than-expected prices.

On a positive note, real disposable income was up in March for the ninth consecutive month and was at its highest level in the last two years. The personal savings rate also hit its highest level in over a year.

However, the firm’s research shows that consumer budgets were still tight in April. Morning Consult’s data showed that 49.9% of adults had money left over to save in April, 5.5 percentage points less than this time last year and down 12.6 points from 2021, suggesting that increases in the personal savings rate may flatten out or decline in the coming months.

Higher-income households show the largest increase in their inability to save, and they’ve also shown signs of financial instability, according to Morning Consult data, including higher rates of lost pay. A large amount of high earners say their finances are worse off than the previous year and they are becoming increasingly price sensitive.

Walmart and Dollar General have recently reported that higher-income shoppers are choosing their locations for cheaper goods. Recently, Walmart announced an unusually early upgrade to its annual profit forecast, as the retailer is seeing success from higher-income shoppers choosing Walmart for their groceries. Target, typically a shopping destination for middle- to higher-income households, is also upping its grocery game, hiring more employees with relevant experience and improving its produce quality and presentation.

Inflation slid slightly in April to 4.9% year over year. April’s consumer-price index reading was down over March’s 5% reading, and, although inflation has fallen 10 straight months, it remains historically high. The Fed has been aggressively increasing interest rates in hopes to slow down inflation, and is looking for signs that inflation is lowering to its 2% target.