Inflation won't slow holiday shopping for many consumers, survey says
Most consumers plan to spend the same amount or more on holiday gifts compared to last year, a survey from Klaviyo said. (iStock)
Rising costs due to inflation have prompted many consumers to tighten their budgets, particularly on discretionary purchases, according to a recent survey from Klaviyo. However, many said it wouldn't slow down their holiday shopping.
The majority of respondents (67%) said that inflation — which rose 7.7% annually in October — has already affected their purchasing decisions. To offset price increases, most consumers said they have spent less on discretionary purchases like hobbies, out-of-home entertainment, clothing, jewelry and home decor.
Yet, despite trimming their budgets, the survey said that 65% of consumers plan to spend the same amount or more on holiday gifts compared to last year.
Most shoppers spend between $250-999 on holiday gifts each year, and that's expected to stay the same for the 2022 holiday season, the survey said. However, younger generations are more likely to increase spending compared to older generations.
"According to the research, consumers still plan to spend—a lot—over the holidays," Klaviyo's survey stated. "Different demographics are picking and choosing their discretionary spending more carefully, making ends meet by increasing budgets for some categories and decreasing them for others."
Keep reading to learn about how you can budget for holiday spending. And if you’re interested in financing options for larger purchases, you can visit Credible to compare interest rates on a variety of financial products without impacting your credit score.
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Consumers are shopping earlier for holiday gifts
Rising costs mean consumers are more worried about affording the holidays than before, according to Andrea Woroch, an author and budgeting expert.
One trend taking shape is that consumers are shopping earlier. More than half (55%) of consumers had planned to start their 2022 holiday shopping before Halloween, according to a survey from Bread Financial.
"The reason for this is because they're worried about not having enough cash in November and December or that prices will continue to go up on popular gifts," Woroch said.
By getting a jump start on shopping, consumers can "spread out purchases over a few pay periods and manage [their] cash flow better, so [they] don't rely on those high-interest credit cards," Woroch added.
Another emerging trend is that retailers are rolling out promotions way ahead of Black Friday, she said.
"The key to affording the holidays comes down to setting a budget, tracking purchases so you don't go overboard and looking for easy ways to free up cash in your current budget to help pay for seasonal expenses and purchases. This way, you can enjoy the season stress-free," Woroch said.
If you're planning to borrow money to finance holiday shopping, you may want to consider a 0% APR credit card or a personal loan for larger purchases. You can visit Credible to compare multiple rates and lenders for free, all in one place.
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Ways to budget for holiday spending
Saving money may seem challenging with high inflation, but consumers could be paying more on their monthly bills without even realizing it, Woroch said. Here are some ways consumers can save on their monthly spending:
Rethink your cell phone plan
Consumers could rethink their mobile data plans and switch to cheaper, lower-tiered programs or look for carriers that offer deals for buying service in bulk, such as $15 per month for talk, text and data or just $30 per month for unlimited data, Woroch said. In some instances, she said reevaluating your cell phone plan could result in more than 50% cost savings.
"One study found that 90% of mobile users waste money on unnecessary unlimited data plans and you could save a lot by switching," she said.
Raise your insurance deductible
The more you increase your insurance deductible, the lower your monthly premium becomes. Raising your deductible could make sense if you can afford higher out-of-pocket costs when a claim is made. The move could help some consumers save up to 20% on their monthly premium, Woroch said.
Unplug unused appliances to save money on electricity
Inflation and rising costs for electricity and gas have increased the amount consumers spend on utilities. The latest Consumer Price Index (CPI), a measure of inflation, showed that the electricity index rose 14.1% over the last year and the index for natural gas increased 20% over the same period, according to the Bureau of Labor Statistics (BLS). Consumers could save as much as 10% on their electricity bills by unplugging unused gadgets, Woroch said.
Another way you could save on your monthly bills is to take out a debt consolidation loan to help pay off existing debt at a lower interest rate. Visit Credible to compare debt consolidation loan options and find your personalized interest rate without affecting your credit score.
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