Tax rebates headed for the pump, grocer: survey

A motorist fills his car's tank with unleaded fuel at a service station in Washington in this January 2, 2008 file photo.

NEW YORK (Reuters) - Consumers will use much of their tax rebate money to pay for increasingly expensive gas and groceries, rather than spend it on electronics or clothes, said the most recent survey by the National Retail Federation.

"The rising cost of groceries and gasoline means that discretionary spending is taking a backseat to necessities," Tracy Mullin, president and chief executive of the world's largest retail trade association, said in a statement.

"For many consumers, struggling with rising bills and lowering home values, economic stimulus checks could not come at a better time," Mullin said.

The latest survey found 17.2 million people plan to use some of their tax rebate to pay for gasoline, up from 12.1 million in the trade group's February survey. About 21.2 million people plan to use some of the money for staples such as milk and bread, up from 20.4 million in February.

The most recent survey, which polled 8,347 consumers, was conducted from April 29 to May 7 by BIGresearch.

Fewer people plan to spend rebate money on furniture -- 2.7 million, down from 4.0 million in February -- or a new car -- 2.4 million, down from 3.2 million -- or on indulgences such as a salon or spa -- 2.9 million, down from 3.5 million.

Consumers overall plan to spend 39.9 percent of their tax rebates, or $42.2 billion, on food, gas and new items, the survey said. They also plan to pay down $28.1 billion in debt, put $20.1 billion toward savings, invest $3.4 billion and pay $4.9 billion in medical bills, the survey found.

The Recovery Rebates and Economic Stimulus for the American People Act of 2008 provides $152 billion in tax rebate checks of up to $600 per working individual and $1,200 per married couple, plus $300 per child.

(Reporting by Ilaina Jonas; Editing by Braden Reddall)