How inflation and dynamic pricing are fueling concerns of ‘price paranoia’

Consumers are increasingly growing skeptical of how retailers determine prices amid an unpredictable economic environment.
This is fueling a phenomenon called price paranoia, which can encompass a number of anxieties related to pricing. Someone who has price paranoia might not feel confident that they know the true price of a product due to hidden fees. Or, a customer might have price paranoia if they are concerned about prices rising about a product, or question why a product is listed for less somewhere else.
Put together, retail analysts expect anxiety about pricing to be a defining trend in 2025.
The phenomenon was highlighted in a recent Gartner report and comes at a time when many retailers and brands are trying to win customers back by dropping their prices. In the 2024 Gartner Consumer Cultural Attitudes and Behaviors Survey, about eight in 10 U.S. consumers “are very or extremely concerned about costs of living.” The survey also showed that 59% of shoppers are concerned that brands are unnecessarily raising prices to pad out their profits, compared to 53% in 2023. According to analysts, paranoia around what things should cost is likely to stick around, especially as more uncertainty, like tariffs, enters the horizon.
“Inflation is still having a massive effect on how people are behaving,” Gartner analyst Kate Muhl recently told Modern Retail. “It’s not just that they’re price conscious, but they’re actually paranoid about prices because of the unpredictability.”
Price paranoia is easy to spot thanks to social media, where people compare and contrast the price tags on products across different retailers. Shoppers point out that sometimes even the same retailer offers a product cheaper online than in stores. One TikTok video calling attention to Kroger’s dynamic pricing displays brought in thousands of comments criticizing the changing prices throughout the day.
A growing distrust of corporate retail
Meir Statman, a professor of finance at the Leavey School of Business at Santa Clara University, said that consumers’ spending paranoia generally increases when the economic environment is volatile. As such, even when general inflation is stabilizing as it has the past year, shoppers are keeping practices like corporate greed on their minds. “When inflation is high, producers see it as a license to raise their prices, whereas they were maybe afraid to do it before,” Statman said.
So even when a retailer slashes prices on thousands of items — something the likes of Target and Walgreens have done recently — customers don’t always rush back to stores. Last year, Target issued multiple rounds of price cuts on thousands of items. But that didn’t translate into more sales. At its recent third-quarter earnings, Target’s year-over-year sales were down nearly 1% to $25.2 billion.
Statman said the lack of excitement over price cuts may be due to existing confirmation bias. “People accept or reject things based on what they already believe,” he said. In this case, many Americans are looking around and still anecdotally seeing their cost of living is still higher than it was in 2019.
Consumers are more price-aware than ever before
As price paranoia becomes more prominent among shoppers, analysts are trying to study the nuances of the phenomenon.
“For me, there are two types of price paranoia,” said Jon Copestake, global lead retail analyst at EY Insights. The first is a fear that shoppers tend to develop online, which has them questioning whether the price they are seeing for one item at one retailer is the same elsewhere. “They’re asking themselves, ‘Is the algorithm just finding a price that’s suitable for me?’” This suspicion is especially increasing as dynamic pricing has taken off in the past few years, Copestake explained.
Another type of price paranoia he sees is when someone questions whether something is truly on sale or if it’s the same price the retailer always offers. That’s a more established retail phenomenon. “That’s something we saw during the recent holiday sales,” Copestake said.
As people have become more mistrustful of retail pricing, their perception of value has also changed. For example, Copestake said frugality is “now seen as a badge of honor.”
More people are showing off their ability to save by finding bargains and passable dupes of expensive products. On platforms like TikTok and Instagram, popular posts are increasingly showing off cheaper versions of highly-coveted products, from Uggs to high-end skin care, that they are able to find on other platforms like Amazon and Temu. In the Gartner survey, 88% of people reported they’re increasingly embracing underconsumption compared to two years ago.
“That’s something that I think retailers probably need to think about and how they position around that,” Copestake said.
Copestake said that people’s heightened awareness over pricing is unlikely to go away anytime soon. “It’s a reflection of the macroeconomic environment and the uncertainty we’re feeling in terms of the economy more generally,” Copestake said.
One thing retailers can do to alleviate some price paranoia, Copestake said, is at least be transparent about the prices of big-ticket items that can be found at other retailers. That can at least keep some customers from cross-shopping at other retailers for all their other needs. “You may not make a bigger profit on that, but you’ve brought them into the store,” he said.
Still, price paranoia is likely here to stay, as President-elect Donald Trump has threatened to issue a bevy of tariffs that could lead to more price increases.
“There is this expectation amongst consumers that maybe prices could come down,” Copestake said. “But in any economy, prices don’t really go down unless it’s a case of Japan during the stagflation years.”
“It’s difficult to adjust people’s every purchase to the latest inflation rate,” Statman said.