Americans’ next major financial headache: Utility bills

Faced with scorching heat and surging utility bills, Americans are cutting back on groceries this summer just to make ends meet.

According to a recent survey by energy comparison website PowerSetter, one in three U.S. households is spending less on groceries because of sky-high utility bills.

About three-quarters of respondents said their summer utility bills are to blame.

“Extreme heat is driving higher energy consumption,” PowerSetter CEO Mark Feygin told Fortune. “Households are more likely to turn up the AC amid the raging heatwave, which increases their energy consumption and associated expenses.”

The pain doesn’t end there.

According to Feygin, utility companies have to raise prices because of inflation. For the average American, the end result is a high utility bill caused by round-the-clock AC usage and more expensive energy rates.

While estimates vary, the National Energy Assistance Directors Association (NEADA) said the average U.S. electric bill will likely reach $719 between June and September.

This is a nearly 8% increase compared to 2023, which was the hottest summer on record, according to a study published in Nature.

NEADA executive director Mark Wolfe warned Americans that they should expect higher bills this summer. The 2024 average “is likely just a base for summer electric bills in the future,” he said.

Meanwhile, the U.S. Energy Information Administration reports that average residential electricity bills are rising at the fastest pace since the early 1980s.

No matter where Americans turn, inflation continues to burn a hole in their pockets.

Consumers are still cutting back on expenses

Although inflation is down from its generational peak in mid-2022, high prices are here to stay. Since the beginning of 2020, consumer prices have risen a whopping 20.8%.

So, while the latest Consumer Price Index report suggests inflation growth is inching closer to target, Americans are still footing the inflation bill accrued after the pandemic.

Due to higher costs, many families have to make difficult decisions about how they spend their money.

According to the latest Ipsos Consumer Tracker, about a third of Americans have cut back on fast-food, sit-down restaurants, and food delivery services.

This trend is especially pronounced among low-income adults, over 40% of whom said they’ve cut back on quick-service restaurants since the start of the year.

According to TransUnion’s latest Consumer Pulse Study, half of Americans cited the rise in the cost of living as their primary concern, while 84% named it as a top-three worry.

The survey revealed that 39% of respondents had already reduced their non-essential purchases, including traveling and entertainment.

A separate study by TD Bank also revealed that 30% of respondents cut spending due to higher prices and concerns about the economy. Two-thirds of respondents said personal finances were what kept them up at night.