As the holidays are rapidly approaching, the main concern I’m hearing is, “How am I going to pay for everything? Inflation is out of control!” Families are concerned about how they are going to fund everything from Christmas and Hannukah presents to holiday travel to holiday meals. People are reluctant to host the holidays at their homes or throw their annual holiday parties as the costs of food and beverages seem to rise by the day. And that trip to see Aunt June and Uncle Joe? Definitely out of the question with travel prices sky-high.
However, I did a little digging to see what the real impact of inflation could be this holiday season. What can we really expect?
Higher Prices and Lower Sales
According to PWC, American consumers are expected to spend $1,530 this holiday season on gifts, travel, and entertainment. This is 7% more than in 2023, in line with inflation. That’s a hefty price tag for most Americans, and about 40% of consumers are expected to spend more than they did last year. U.S. holiday sales in 2023 are expected to rise at the slowest pace in five years, according to recent data from the National Retail Federation (NRF). Americans are pausing and thinking twice before any purchases they make this holiday shopping season. On a number basis, the NRF said holiday sales, including e-commerce and non-store sales, could rise between 3% and 4% to $957.3 billion and $966.6 billion during November and December. This compares with a 5.4% rise in 2022 and a 12.7% rise in 2021.
The Holiday Table
When it comes to the holidays, most people dream more about the delectable food on their holiday table than their wrapped gift. Succulent ham and sweet potatoes, latkes, and brisket…take your pick! I looked to Wells Fargo for some ideas on what we can expect to spend on our holiday feasts.
The good news is that turkeys are 16% cheaper than last year. That’s quite some savings! Unfortunately, if you prefer ham, you’ll pay 5% more this year, a whopping $4.56 per pound. The classic canned green bean prices are up 9% and russet potatoes are up to $1.17 compared to $1.08 last year. And if you’re making your favorite pumpkin pie, expect to pay 30% more for canned pumpkin!
Leaving On a Jet Plane…Maybe Not This Year
While we are seeing the impact of inflation across all areas such as food, gifts, and décor, we are seeing the most pain in the travel sector. According to Bankrate:
Inflation is impacting travelers. 77% of people traveling for leisure during the 2023 winter holiday are likely to change their plans due to inflation or rising prices.
Budgeting is the most significant worry for holiday travelers. 30% of 2023 holiday travelers are worried their trip will place a strain on their budget and 25% anticipate feeling pressured to spend more than they’re comfortable with.
People are unpleasantly surprised by travel prices. 55% of Americans traveling for leisure or business in 2023 say they’re worried about higher prices than they’re accustomed to.
Four Tips to Avoid Overspending
While consumers feel frustrated with rising costs, there are a few ways to combat overspending. A couple of these tips do require discipline, but your discipline will be rewarded!
- Create a budget- and stick to it. It sounds obvious, and yes, most people tend to make a holiday budget year after year. The problem is that a lot of those people don’t stick to it. This year, try to take your budgeting seriously and if you stay within the range, you will prevent wracking up unwanted credit card debt- especially at these high-interest
- Avoid waiting until the last minute to holiday shop. We’ve all been there, with less than three days to get gifts for everyone, we are empty-handed. This is when we tend to buy anything we can and don’t shop for deals and discounts. We generally spend the most amount of money on gifts when we are frantically trying to buy those last-minute gifts. This year, take your time. Do some research on the items that you want to purchase and see if there are discounts in stores or online. Taking your time and planning ahead will avoid last-minute shopping pitfalls.
- Focus on experiences rather than gifts. More and more people are leaning towards purchasing experiences that the whole family can enjoy rather than a gift that may sit in the closet for an undisclosed length of time – or re-gifted! The great thing about experiences is that they are invaluable if you are making family memories to last a lifetime. Purchasing and spending money on experiences oftentimes brings much more joy and satisfaction than a material gift.
- Potluck is OK! We all know hosting a holiday dinner or lunch takes a lot of time, preparation, and resources. Few of us want to give up all of the control over our holiday meals and enjoy doing all of the work. But in a year with exceedingly high costs, it’s okay to let others chip in. Allow your guests to bring their favorite dish and let that take some pressure off of your time and wallet. At the end of the day, most people truly enjoy making contributions.
Bottom Line: Focus On the Magic of the Holidays
Yes, 2023 is going to be an expensive holiday season but the most important parts of the holiday season do not carry a price tag. The holidays are a time to celebrate your beliefs and spend time with friends and family. It’s a time to reflect on your blessings. It’s a time to slow down and take in the magic.