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Rural Marketing: Inflation Drops Discretionary Income for Small-Market Consumers Nearly 50%

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Inflation and rising prices are increasing pressure on consumers in smaller markets and rural communities, most notably in decreased discretionary income, and the result is shifting behavior.

Although inflation dropped 0.2 points from July to 8.3% in August, it continues to outpace wage growth. During this period, the restaurant inflation rate increased to 8.0% (up from 7.6%), while Grocery was 13.5% (an increase from 13.1%). At 25.6%, gasoline is the highest increase consumers are facing, which is a decrease from 44.09% in July.

NOTE: Household Energy at 19.8% is up from 18.8% in July. With winter months approaching, we can expect home heating costs to rise.

Inflation Cuts Discretionary Income in Half for Small-Market Consumers

Discretionary income decreased by nearly half (49.1%) in small-market and rural communities from June 2020 to June 2022, compared to only 13.1% for urban consumers, according to analysis of consumer price index (CPI) data by Iowa State University. During this period earnings only rose 6.1% against inflation of 9.1%.

Rural households are more vulnerable to inflation. In 2020, rural household post‐tax income averaged $58,012. About 82% of rural incomes went toward expenses, leaving 18% in discretionary income for savings and unanticipated expenses. Expenses rose by 18.5% overall by 2022 while earnings increased only 6.1%

The net effect cut rural discretionary incomes by 49.1% between June 2020 and June 2022, reducing the cushion to only $5,426. Expenses now consume 91% of rural take‐home pay.

What Makes Households in Small Markets More Vulnerable to Inflation?

Increased transportation and housing costs are the key contributors to inflationary impact on households in small markets and rural communities.

Transportation, essential because these residents drive farther to work, school, or to shop, has made the biggest inflationary impact on rural households, with annual fuel costs increasing $2,470 over the past two years.

Rural housing costs are also on the rise, including mortgages and insurance, maintenance and repair, and other home services.

  • The costs of owning a rural home rose by an extra $398, with 70% of the gains happening in 2021.
  • Fuel oil and liquefied petroleum/propane gas for home heating now costs an extra $434, with the biggest price hikes occurring in 2022.
  • Electricity bills are now $311 higher than two years ago, with almost all price gains happening this year.

At 20% of the U.S. population (and growing), consumers in small towns and rural communities are an often overlooked and untapped opportunity for marketers across all categories.

Marketing to these consumers is not a one-size-fits-all approach. Consumers in smaller C&D counties consume and respond to media differently than their urban counterparts. If this growing rural audience is important to your business, Mspark can help you reach them. We specialize in driving brand growth and customer engagement strategies for national and local advertisers in these important markets.

Did you know?

Rural consumers respond to print offers when making purchase decisions for a variety of goods and services, including:

  • Dining out
  • Grocery
  • Home Improvement
  • Clothing
  • Automotive
  • Medicine
  • Health & Beauty Products

Consumers in small markets are also 21% more likely to use coupons than their urban counterparts in response to inflation and rising prices.

Brand preference becomes expendable when a greater perceived value is available – from ANOTHER BRAND. Brands who understand the NEW CONSUMER VALUE EQUATION can generate trial, create preference, and steal share. Mspark delivers value to the consumers most likely to become your best customers.

By combining consumer and marketplace data, we craft coordinated media campaigns using a seamless mix:

  • shared mail
  • direct mail
  • trigger-based marketing
  • digital advertising solutions such as display, retargeting, and Mobile ID tracking extend reach and response of your campaigns

–all strategically crafted to drive the right audience attention to achieve your marketing goals.

Learn more about the distinguishing characteristics of rural consumers in our blog post. Reach out today to plan your strategy.

Sources: Bureau of Labor Statistics, August 2022 CPI Report; Impact of Inflation on Rural Household Expenses in the U.S., June 2020‐2022, Iowa State University; Prosper Insights & Analytics 2022