The impact of inflation on consumers surges in the second quarter of 2008 to the highest level since measurements began in 2005. The Index now stands at 139, up from 123 in the first quarter, compared to the second quarter of 2007, when the Index measured 106.

The Stahler Inflation Pain Index is designed to measure pressure consumers experience as a result of rising prices and the ensuing impact on spending. Each quarter, a national sample of 450 households is interviewed for an assessment of their financial situation and standard of living. The Index - funded by the Stahler Group, a financial advisory firm - was developed by Chicago-based survey research firm Leo J. Shapiro & Associates, L.L.C.

The pain of inflation is consistently severe for households with annual incomes of less than $30,000. At 163, it is in sharp contrast to an Index of 109 among households of incomes above $100,000. Overall, the bite of inflation became more severe for every income group in the nation during the second quarter of 2008. Until this quarter, affluent households were largely spared, while middle and lower income households struggled to cope. Now, in the second quarter, the biggest increases in the Inflation Pain Index come from households whose incomes are $70,000 and higher.

Households' assets, including stock and home ownership, generally diminish the pain of inflation. This continues to be true for most, even as home prices have declined. Relief resulting from stock ownership, however, has narrowed somewhat between the first and second quarters of 2008.

During the second quarter of this year, the study found 72% of U.S. households cutting back on driving and 60% spending less on food. Nearly two-thirds were spending less on clothing (64%), and more than one in four (27%) were cutting back on medical expenses.