In weak economy, forgoing $4 lattes for home brews

As inflation squeezes budgets, middle-class Americans are taking fresh stock of their spending in search of ways to save a nickel or a dime. The result: People are giving up a variety of small financial vices.

For Michelle Hovis, that means refilling her husband's used soda container from a 2-liter bottle she buys on sale for 98 cents. She tweaked his daily habit of buying a 20-ounce bottle when the price crept up to $1.39.

"The price of gas, milk, eggs--everything you can't control--is going up. So you need to watch the things you can control," said Hovis, a 31-year-old stay-at-home mom from Iron Station, N.C.

While the idea that little costs add up is nothing new, it comes with added sticker shock as food and gas prices sprint along at a record pace. The result is that people are finally putting the brakes on vices once considered necessary--like frappuccinos.

Milk, coffee, fresh fruit and bread were among the items that got more expensive by an average of 0.9 percent in April, the largest one-month increase since January 1990. Gasoline prices were up nearly 21 percent compared to a year ago.

Workers' wages, meanwhile, dropped for the seventh consecutive month.

The result is fewer latte runs. Literally.

Last month, Starbucks Corp. blamed rising food and gas prices when it reported a 28 percent drop in second-quarter earnings, and said sales at U.S. stores open at least a year had dropped--indicating some may finally be summoning their inner Scrooges. Coca-Cola Enterprises Inc. also said last month that weak U.S. sales--especially on some 20-ounce beverages--will likely cause its earnings to drop

Consider the jaw-dropping math behind "the latte effect" in today's economy.