This year, Christmas shopping is expected to be more expensive than it has been previously. The holiday season is generally one of the most expensive annual periods with both the Thanksgiving weekend, Christmas Day, ad New Years being within one month of each other. Families generally mentally prepare to have to fork out extra cash during this time, however, if you have left your gift shopping to the last minute this time around you may have to spend more than you were prepared to.
2024 sees cost-of-living sky rocket
While cost-of-living has been on a downward decline as the world emerges out of the shadows of COVID-19, expenses continue to be felt by the average American. A major focal point of this year’s elections was the current cost-of-living and concerns by voters on struggles to cover basic living expenses, specifically housing and food. Data from the Consumer Price Index showed that cost-of-living rose by 3% between June 2023 and June 2024.
While inflation also seems to be decreasing, this does not necessarily mean that cost-of-living will also decrease. Inflation measures the rate at which prices are rising, not the absolute level of prices. While a drop in inflation indicates that prices are increasing at a slower rate, it does not automatically lead to lower prices for goods and services. The cost of living could still be high if prices remain elevated, even if they are no longer increasing as quickly.
Christmas shopping expected to be more expensive this year
With cost-of-living still sitting high above what it once was pre-COVID19, this year’s Christmas shopping may be higher than average for consumers. “Price is still the primary factor influencing consumers when choosing where to shop, with 52% ranking it as a crucial consideration,” said Keith Watt, Head of Retail at KPMG, “our findings suggest that this Christmas will be marked by careful budgeting and a stronger emphasis on value, presenting retailers with challenges and opportunities to meet the needs of Irish shoppers,” he added.
According to recent data by KPMG’s Next Gen Retail Survey, 72% of consumers expect that Christmas shopping will be significantly more expensive this year, while 36% expect to spend less compared to last year. More than half of respondents have indicated that they intend to cut back on Christmas gift budgets and 56% plan to reduce eating out to save money. 54% expect to give smaller gifts this year due to rising prices.
Christmas is generally a more expensive time to shop whether or not there is a cost-of-living crisis. While some retailers entice consumers with Christmas specials, others hike up their prices as they know most consumers will be shopping last minute to find gifts for family and friends. Additionally, the festive season is a key time where fraud occurs, with consumers often falling prey to online shopping scams and other hacking initiatives.
Pressure to participate in over consumption over the holiday season
The holiday season, while generally a period to meet with extended family and experience a much needed end-of-year break, is often tainted with pressure to participate in over-consumption. Many families may be feeling the added pressure to match the level of gift giving of other family members despite rising prices. Families with young children are also often pressured into buying quantity over quality when it comes to gifts.
It is important to not get wrapped up in making the holiday season about gifts. While it provides an opportunity to treat and spoil others, it is just as important to use this time to reconnect with important relationships and to consider the year as a whole. Reflection and mindfulness is key during this period, and keeping a level head (and budget) may help to face the prices in the aisles. Some exciting financial changes are expected for 2025, and its important to keep an optimistic outlook.