Her children will get small gifts. The rest of the family won’t get it at all.
Kendra, who lives in a Chicago suburb with her husband and two young children and works part-time as a bank teller, is paying twice as much to fill in every week at the pump.
“I’ve seen food and gas prices go up so fast,” she said. As she drives to the gas station near her house, she often finds herself yelling at big signs that list the latest prices.
Kendra describes her family as lower-middle class. She’s also started using coupons to buy groceries more often, and she makes purchases more often at discount stores like Aldi to get the lowest prices. Sometimes this means traveling long distances to find cheap food. “Anywhere I can find a deal or a deal, I’m trying.”
Kendra and her husband saved up to buy a Nintendo Switch for their children, ages seven and four, but returned it two weeks later because their water heater unexpectedly exploded, costing them $1,500. Was.
“Not being able to provide them with that Nintendo Switch was heartbreaking to me,” she said.
Instead, it turned to Facebook’s marketplace to buy used toys for the first time, and kids are getting Play-Doh and Hot Wheels, too. The couple will not exchange gifts with each other or buy gifts for their parents and relatives this year.
“Things are really tough right now,” she said.
Higher prices for TV and sports content
They are hardly alone. Rising prices are squeezing the budgets of millions of Americans, forcing many financially stressed families to hold back on gifts.
Energy prices rose 33.3%, including a massive 58% increase in gasoline.
But not all buyers are equally affected by higher prices.
High-income consumers — who have more cash for discretionary purchases — are able to withstand higher bouts of inflation than low-income buyers, who spend a greater percentage of their income on fuel and basic essentials.
This makes them more vulnerable when food or gas prices go up, leaving them with less money left over to buy warm holiday gifts like electronics or games or non-essential items.
“Inflation has been more painful for low-income households,” economists at Bank of America said in a research report last month.
The rise in prices of essential items will impact the spending of budget-strapped shoppers on holiday gifts, which are more expensive than last year.
Apparel prices were up 5% in November compared to a year earlier, with jewelry up 6.7%, television 7.9%, sporting goods 8.4% and furniture 11.8%.
holiday shopping disparity
According to a consumer survey by Deloitte published in October, vacation spending is expected to average $1,463 per household by 2020, up 5%.
But the consulting firm has predicted huge discrepancies in spending between income groups, driven by inflation.
While consumers with an annual income above $100,000 will increase their vacation spending by 15% from the previous year, vacation spending will only increase by 3% among shoppers who earn between $50,000 and $99,000 annually.
And for consumers earning less than $50,000, spending will drop 22% during this year’s holiday.
“Two is the story of the holiday season, with high-income families planning to spend five times as much as low-income families,” Deloitte said. “Most of this season’s gains will be driven by high-income buyers.”
According to Deloitte, many low-income shoppers will opt out of the holiday spending season altogether.
Some retail chains have recently said that low-income customers are feeling the effects of inflation and are back on discretionary spending.
Walmart Noted that it is actively trying to keep gas prices low to attract customers about how much they are paying at the pump, especially in the form of federal stimulus benefits.
For Erin Leonards, who lives in southwestern Louisiana, “gas prices kill me.” She now spends $50 filling her tank these days. “It used to be more than $30,” she said.
Rising gas prices are squeezing Leonards, who has three young children aged two, four and six. She’s in beauty school and works part-time at a fried chicken restaurant, earning less than $50,000 a year.
Leonards said she bought 18 to 20 presents for each of her children last Christmas and gifts for her three children as well as nieces and nephews.
This Christmas, she’s buying only four presents for each of her three children, telling them “some you want, some you need, some you wear, and some you read.”
Leonards said his kids understood when he explained that “Santa wanted to try something new this year” with the gifts. But she still felt guilty that she didn’t get them as much as she did last year.
Retail analysts at Goldman Sachs said in a research report this week that rising inflation, combined with a pullback in federal stimulus, will make it harder for budget-strapped consumers to buy discretionary goods in 2022.
This could affect both retailers that make up low-income shoppers and the US economy more broadly.
Next year, “consumer focus likely to shift” [finding] Prices on key essentials, while discretionary spending declined,” analysts said. Low-income shoppers “are likely to remain under significant pressure.”
CNN Business’ Julia Horowitz contributed to this article.
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