Inflation is changing how Americans shop this holiday season.
Though consumer spending was strong over Thanksgiving weekend, one of the busiest shopping periods of the year, high inflation means shoppers are getting less bang for their buck, experts said.
“Consumers are pretty much spending more and buying less,” Jill Gonzalez, an analyst at personal finance website WalletHub, said in an email.
According to a recent WalletHub survey, 50% of consumers said Santa will be less generous and 40% of Americans are foregoing holiday gifts this year due to inflation, she said.
The National Retail Federation, the industry’s largest trade group, said Americans will likely lean on savings to afford holiday gifts this season.
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Inflation eased slightly but remained high in October. On a monthly basis, overall consumer prices increased 0.4% in October while core prices advanced 0.3%.
Grocery store prices have also been hit by inflation, with the food index up 11% in October compared with last year.
Thanksgiving hit wallets hard. The average cost of this year’s classic feast for 10 was $64.05, just under $6.50 a person, according to the American Farm Bureau Federation’sannual Thanksgiving dinner cost survey. That was the priciest meal in the survey’s 37 years, up 20% from $53.31 in 2021.
How does inflation affect Christmas shopping?
As gas and electricity costs increase, more expensive manufacturing and transportation has led to higher prices across the board, Gonzalez said.
Not all categories, however, have seen the same increase in price. While appliances and furniture have experienced a 10% to 15% hike, apparel prices are only about 5% higher, Gonzalez said.
Since some prices have not increased as much or have dropped, consumers will likely substitute more expensive items for cheaper options, said Jonathan Wright, an economics professor at Johns Hopkins University.
“It’s smart for consumers to potentially shift their spending patterns in the direction of things that have been cheaper,” Wright said.
Discounts also abound as retailers try to get rid of excess inventory piling up in warehouses and backrooms, said Mark Cohen, director of retail studies at Columbia Business School.
But shoppers, Cohen said, should be careful not to succumb to the fear of missing out on a product or deal.
“Empty shelves is not going to be an issue this year,” Cohen said. “Quite the contrary, there is this tremendous excess inventory throughout the marketplace in most, if not all categories, and the result of that is that discounting is going to become increasingly more aggressive the closer you get to the holiday.”
Cohen said shoppers should think about how much money they want to spend and stick to their budget, adding that “overindulgence is going to be more expensive than it has been in the recent past.”
“It’s a year to be careful, more so than ever before,” Cohen said. “It’s a year to be organized and thoughtful.”
Online shopping has also been hit by inflation. On Thursday, Adobe announced online inflation data for November, which it said reached a record high at 3.5% year-over-year, which is the largest increase since Adobe began tracking the digital economy in 2014. It’s also the 18th consecutive month of online inflation.
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Saving tips to stop inflation from ruining your budget
Here are three fast tips to help combat rising costs:
Shop store brands, discount grocers
Store brands have grown in popularity in recent years and no longer carry the stigma they once may have when they were considered more generic.
Trader Joe’s and discount grocer Aldi are well-known for carrying more products under their own private labels than store brands. Target, Walmart and Kroger have also added more products under private brands in recent years.
“You often see lower prices and a lot of great quality there,” said Andy Harig, FMI vice president, tax, trade and sustainability.
Costco, Sam’s Club offer ways to stock up in bulk
Buying in bulk at Costco, Sam’s Club and BJ’s Wholesale can cut your number of shopping trips down and lower costs. However, wholesale clubs are not immune from rising prices.
Costco has hiked prices on some items due to inflation, but the company said it wouldn’t raise membership fees for now. However, Richard Galanti, Costco’s chief financial officer, said the increase will take place at some point.
“We still have that arrow in our quiver as we go forward,” Galanti said during a September earnings call.
Shopping tip: While wholesale clubs do have membership fees, new members can often find specials and the savings often outweigh the fees. If they don’t, check out club refund policies on memberships. You can also save by going with a friend who is a member. Note, Costco accepts food stamps at clubs, according to its website.
Use cashback apps, rewards programs
Clipping coupons is no longer the only way to save money. Cashback apps and rewards programs can save money on everyday purchases when going out to restaurants, including fast-food chains, and on your holiday gifts.
Popular cashback apps include Ibotta and Fetch Rewards. You can also put money towards college with the UPromise program and earn cash back on online programs with Rakuten, formerly known as Ebates, and RetailMeNot.
Contributing: Paul Davidson and Brett Molina, USA TODAY