According to a Bankrate study, the majority (88%) of holiday staples have become more expensive in the last year.
This holiday season, inflation may be as much a part of Americans’ festivities as gifts and gatherings.
Almost every aspect of the holiday season is more expensive this year. Are you throwing a holiday party? Food prices are increasing at the fastest rate in more than 43 years. Visiting family and friends? Flight prices have risen by the most in a year, prompting some travelers to reconsider their plans. Even decorations and gift wrap are about 13% more expensive this year than last.
According to a Bankrate analysis of 40 seasonal items from the Department of Labor’s consumer price index, the majority (or 88%) of holiday staples have risen in price over the past year (CPI). It means that, according to Bankrate’s holiday shopping poll, two in five Americans (or 40%) believe inflation will change the way they shop.
Even beyond the holiday essentials, the fastest price increase in four decades has been eroding Americans’ purchasing power for more than a year, likely leaving people with less spending money as the holiday shopping season approaches. According to Moody’s Analytics, the average American is paying an extra $433 per month due to inflation.
Inflation may be as prevalent as gifts this holiday season, but it doesn’t have to ruin the festivities. Limiting the amount of inflation that ruins your plans boils down to knowing which items are the most inflated and devising a strategy—for both your shopping and your budget. Here are some potential financial strains on your holiday spending this year and some creative ways to stretch your dollars.
Holiday entertaining and travel are the most expensive this year.
Bankrate divided the 40-holiday must-haves into four categories: gifts, experiences, travel, and entertainment. While prices have risen on the majority of holiday staples, there are certain areas where Americans are bound to feel the most inflation—and that will undoubtedly be at a holiday party.
Six of the top ten most expensive items were food, including eggs (43%), flour and prepared mixes (24.6%), turkey (16.9%), dairy (15.5%), bakery goods (15.5%), sugar and sweets (14.9%), and seven of the ten most expensive items were related to holiday entertaining.
Even if consumers can limit their spending on feeding their guests, they will undoubtedly spend money on heating and powering their homes, cleaning up after their guests, and decorating their space. Over the last year, the cost of energy services has increased by 15.6%. Meanwhile, housekeeping supplies have increased by 11.9%, while household equipment and furnishings have increased by 7.6%.
The findings reflect the behavior of inflation more broadly: food and energy have been particularly noticeable. Household energy prices have risen twice as fast as all other consumer prices in the last year (17.1% versus 7.7%). Food inflation has risen by 12.4% at the same time.
Meats, an essential entree at a holiday dinner, are up about 3% year on year. Price decreases in popular holiday menu items such as steaks and roasts (down 6.9% and 5.3%, respectively, from a year ago) have offset price increases in ham (9.1%) and pork (4%).
Poultry eaters, on the other hand, may be feeling the effects of inflation the most this holiday season. Chicken and turkey prices are up 14.5% and 16.9% year on year, respectively.
Fish and seafood are up 7.4% in the last year, while fruits and vegetables are up 9.3%.
That’s not to say that skipping a party is the best way to avoid inflation. Travelers will undoubtedly feel the pinch, with three of the ten most inflated items in the “holiday travel” category: airfares (up 42.9%), gasoline (up 17.5%), and transportation services (up 15.2%).
Even staying overnight on your way to a destination can add up, with hotel and motel stays increasing 6.4% year on year.
6 cost-cutting strategies for high holiday inflation
Analysts predict that retailers, particularly big-box chains, will use sales and discounts to entice consumers who are strapped for cash. This is a special characteristic of the current holiday season as retailers hoard excess inventory and worry that rising prices will reduce consumer spending.
But don’t let the lack of inflation—or the lack thereof—be the sole reason you buy something this holiday season. Here’s how to create and stick to a holiday budget, whether you’re shopping for someone, throwing a party, or planning a trip.
1. Create a holiday budget and stick to it.
2. Request a wish list from the people you’re shopping for.
3. Examine individual inflation rates in relation to the items you’re considering purchasing, but make sure they’re still useful.
4. Travel advice: Remember to use your unused points and miles to fund your holiday travel.
5. Have you been weighed down by holiday travel? Find unique ways to give gifts or host gatherings this holiday season.
6. Think of it as aligning your holiday spending with what’s important to you, rather than cutting back.
Personal finance is not about cutting back and denying yourself the things you desire, but about ensuring that your money allows you to get there. Long-taught prudent financial advice also applies to the holidays.
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