Victoria Consolvo

Job Market Paper

Time to Shop Until Inflation Drops: The Effect of Inflation on Household Shopping Behavior 

Abstract: I study how households adapt their shopping behavior when inflation rises. Using transaction-level panel data from 2021–2023, I construct household-specific inflation rates and estimate their causal effects on shopping intensity and bargain-hunting. Higher inflation leads to more shopping trips, greater retailer diversification, and increased reliance on sales and coupons. Responses vary systematically with household characteristics: higher-income households and those with unemployed members respond more strongly, while households whose wages keep pace with inflation respond less. While these adjustments helped households absorb part of the price shock, they imposed substantial time costs. I estimate the time burden from this increased trip frequency using data from the American Time Use Survey, estimating approximately $600 per household per year for each percentage point of sustained inflation. Despite the prominence of search costs in theoretical models of inflation, causal empirical evidence on inflation-induced search behavior has been limited. I provide this evidence by exploiting household-level variation in inflation exposure and show that these behavioral costs are quantitatively important.