This year, Americans plan to spend about the same amount on holiday shopping as in 2021 — but they expect to buy fewer gifts thanks to inflation.
The average household plans to spend $1,455 on holiday purchases, which include experiences, gifts and other retail spending, according to a survey from financial firm Deloitte. The poll, released this week, found that consumers expect to spend $507 on gifts: only a slight increase from $501 last year. But for about the same amount of money, shoppers say they'll purchase fewer presents for their families and friends this year — nine on average per household, down from 16.
Inflation, of course, is to blame.
It's top of mind for consumers this holiday season. Deloitte found that among people who expect to spend more on holiday shopping, 51% say inflation is the reason why. Meanwhile, 66% of respondents who plan to be more frugal this winter say it's in order to cope with higher prices.
How inflation will affect holiday shopping
Inflation has raised prices for goods and services by 8.2% in the past year, according to the latest numbers from the government. The Federal Reserve has been hiking rates to try to bring costs down, but it hasn't entirely succeeded yet — consumer prices increased again from August to September, rising by another 0.4%.
Heading into the holidays, the rate hikes could mean it’s more expensive for consumers to finance purchases. And that's leading to some major — and sometimes contradictory — trends.
“High prices have holiday shoppers prioritizing their purchases, but there are bright lights throughout the season,” Nick Handrinos, vice chair at Deloitte, said in a news release. "Lower-income families feel more confident heading into the holidays, younger generations are embracing new retail formats and retailers do not anticipate the issues with stockouts we saw last year."
Indeed, holiday spending trends vary by income level.
Low-income folks (those who earn less than $50,000 per year) are planning to spend an average of $671 this holiday season, which is 25% more than last year. But people who earn more than $100,000 per year plan to cut back by 7%, bringing their spending down to an average of $2,438, the survey found.
Tips for saving money on holiday shopping
Classic shopping tips like comparing prices at several different stores and buying during the best sales could be extra important this year for shoppers facing higher prices.
A recent survey from Gartner Marketing found that people are already adjusting their strategies in hopes of saving money, naming their top three considerations before purchasing an item as price, value (53%) and free shipping (51%).
The holiday spending season is well underway, as retailers try to attract early spending with sales. According to Deloitte, a quarter of holiday spending will likely happen before the end of October. But starting early isn’t always the best move for your wallet. In fact, consumers who start their shopping on or after Thanksgiving tend to spend less overall.
And while there’s nothing wrong with using credit cards for holiday shopping to collect rewards and points, experts recommend being careful not to make any purchases with credit cards that aren’t in your budget. As tempting as it can be during the holidays, it could hurt you in the long run.