In June 2022, inflation in America -- as measured by the Consumer Price Index (CPI) -- hit a 40-year high of 9.1% on an annualized basis. That was substantially above the Federal Reserve's target of 2%, so to bring CPI down, the central bank embarked on its most aggressive interest rate-hiking ever.

Both rising interest rates and high inflation have an extremely restrictive effect on people's spending habits, because they're forced to allocate more of their income to debt repayments and essential products while luxury purchases take a back seat. As a result, companies selling goods in the latter category have suffered over the past year.

Sea Limited (NYSE: SE) and GoPro (NASDAQ: GPRO) are perfect examples. Each company is grappling with its own internal challenges, but they have undoubtedly felt the effects of the recent drop in consumer spending. Shares of Sea Limited have declined in value by 89% from their all-time high, while shares of GoPro are down 97%.

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Source Fool.com