Is Christmas Less Popular In An Inflationary Environment?

Christmas

“You’re not on the naughty list. Santa’s just out of money!” That’s what many Americans are saying this year, with half of the new polls blaming inflation for a quieter than normal holiday season. 50% said rising prices and a weak economy mean “Santa will be less generous” in 2022. Savvy Christmas shoppers are looking to cut their spending budgets by up to half this festive season – by spending less per person and reducing the number of people they buy gifts from, a study has found. The WalletHub survey of 400 people, conducted in November 2022, found that 40% of Americans have actually given up buying any holiday gifts this year because of inflation.

As 2022 draws to a close, higher prices are hitting shoppers hard. The lingering effects of inflation and shifting consumer priorities will define the 2022 holiday season as consumers look for ways to make the season happy and bright. While many Americans are feeling the pinch of rising prices, they may be evaluating how they spend their money overall between socializing, gift-giving and travel. This has been another historic year for the retail sector and consumers, which we know has had an impact on the way consumers behave against the backdrop of a challenging economic environment with significantly higher levels of inflation and rising interest rates.

Many shoppers are battling pressure to cut back on spending this holiday season. Some even said they would take on debt to bring cheer. According to Oracle’s research, more than two-thirds of people said they would consider store financing or a payment plan to cover the cost of the gift.

Almost every aspect of celebrating the holiday is more expensive this year. Having a holiday party? Food costs are rising at the fastest rate in 43 years. Go home to your loved ones? Air fares over the past 12 months have hit record highs, causing some consumers to rethink their travel. Even decorations and gift wrap cost about 13% more this year than last.

Given the current inflationary environment, 72% of U.S. survey respondents expect to pay more for gifts this year, so they’re looking for bargains. Of those consumers, 44 percent said they were looking for promotions or coupons, and 43 percent said they would switch retailers if they found a lower price elsewhere. 

A similar pattern can be seen in Britain. Six out of 10 Britons expect to spend less this holiday season than they did last year, according to a new survey by Deloitte, Reuters reported recently. The figures show 38% of Britons plan to buy Christmas presents from cheaper brands or stores, while 11% plan to buy second-hand items and 8 per cent do not plan to buy Christmas presents.

As early as November, American consumers have found jingle bells and tinsel in store aisles. It all happened earlier this year. About a third of US survey respondents said they planned to start shopping earlier than last year. 56% said they won’t wait for the Black Friday sales over Thanksgiving weekend, but will start their holiday shopping before October is over. While nearly a third of those surveyed said they would wait until Christmas Eve to buy Christmas presents for their significant other, according to a survey by CouponBirds.

Over the past 80 years, high inflation seems to have dampened Christmas shopping. In 11 years since World War II, consumer prices have risen 6% or more year-on-year around the Christmas season; In October, the figure was 7.7%. In those years, consumer spending grew at an average rate of 1.2%, compared with 3.4% in years with lower inflation, according to Commerce Department data. Consumer spending in the United States has been on a downward trend for months. After rising more than 8% in inflation-adjusted terms last year, consumer spending rose less than 2% in the first nine months of this year.

The difficulty is that these holiday activities really mean something to people, and while it’s important to save money and live within your means, it’s really important that we have these bonding moments. But if you can figure out what you value, you’ll be able to create experiences without breaking your budget. Behind every carnival is a premeditation to boost the economy. The cost of spreading happiness may be high, but happiness can be found everywhere.

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