News - Middle East: Persisting high inflation in the US has forced Americans to spend more on gas and bills, making young and low-income consumers feel the financial pressure and piling credit card debt.

Generation Z consumers and those with low credit scores are falling behind on credit card and auto loan payments and accumulating credit card debt at a pace not seen before the pandemic, Reuters reported Monday, citing US credit files compiled by credit score company VantageScore.

“For instance, credit card balances for people ages 25 and younger rose by 30% in the second quarter from a year earlier, compared with an increase of just 11% among the broader population,” the report added, citing a random sampling of 12.5 million collected by the firm.

Balances for non-prime borrowers -- people with credit scores below 660 -- climbed by nearly 25 percent over the same period, it noted.

According to the report, data released on Thursday indicated that US consumer spending grew at its slowest pace in two years as the economy unexpectedly contracted in the second quarter. 

“Those surging prices are causing consumers to cut back on discretionary spending,” it added, citing giant retail and consumer companies such as Walmart Inc and Procter & Gamble Co, which lowered sales growth forecasts over the past week.

Rapidly accelerating prices could exacerbate financial strains among young people and borrowers with low credit scores, said VantageScore chief Silvio Tavares, noting that among non-prime borrowers, the percentage of credit card and auto loans that were more than 30 days past due also climbed.