Her children will receive smaller gifts. The rest of the family won’t have any at all.
Kendra, who lives with her husband and two young children in suburban Chicago and works part-time as a bank teller, pays double to refuel each week at the pump.
“I have seen such a rise in the prices of food and gasoline,” she said. When she walks past the gas station near her home, she often finds herself shouting at the large signs with the latest prices.
Kendra describes her family as belonging to the lower middle class. She has started using coupons for groceries more often, and she shops more frequently at discount stores like Aldi for the lowest prices. Sometimes that means walking longer distances to find cheaper food. “Anywhere I can find a deal or a good deal, I try to do it.”
Kendra and her husband saved up to buy a Nintendo Switch for their children aged seven and four, but returned it two weeks later because their water heater unexpectedly exploded, costing them $ 1,500.
âNot being able to provide them with this Nintendo Switch broke my heart,â she said.
Instead, she first turned to the Facebook Marketplace to shop for used toys, and she also bought kids Play-Doh and Hot Wheels. The couple will not be exchanging gifts this year and will not purchase gifts for their parents and loved ones.
âThings are really tough right now,â she said.
Higher prices for televisions and sporting goods
They are hardly alone. Rising prices are straining millions of US budgets, leading many financially struggling families to forgo freebies.
Energy prices jumped 33.3%, including a whopping 58% increase for gasoline.
But not all buyers are equally affected by higher prices.
High-income consumers – who have more money for discretionary purchases – are better able to withstand high inflation spurts than low-income buyers, who spend a higher percentage of their income on fuel and utilities. essential products.
This makes them more vulnerable when food or gas prices rise, reducing the amount of money they have left to buy hot holiday gifts like electronics or games or non-essentials.
âInflation has been more painful for low-income households,â Bank of America economists said in a research report last month.
Soaring prices for basic necessities will impact the spending of shoppers on a budget on holiday gifts, which are also more expensive than last year.
Clothing cost 5% more in November than a year ago, jewelry was up 6.7%, TVs 7.9%, sporting goods 8.4% and furniture 11 , 8%.
Holiday shopping disparity
Vacation spending is expected to average $ 1,463 per household, up 5% from 2020, according to a Deloitte consumer survey released in October.
But the consulting firm predicts huge differences in spending between income groups, in part because of inflation.
While consumers with annual incomes above $ 100,000 will increase their vacation spending by 15% from last year, vacation spending will only increase by 3% among buyers earning between $ 50,000 and $ 99,000 per year.
And for consumers earning less than $ 50,000, spending will drop 22% over the holiday season this year.
âThere is a history of two holiday seasons, with high-income households planning to spend five times as much as low-income households,â Deloitte said. “The majority of this season’s earnings will come from higher income buyers.”
According to Deloitte, many low-income buyers will miss the holiday spending season altogether.
Some retail chains recently said low-income customers are feeling the impact of inflation and have reduced their discretionary spending.
Walmart has noted that it is actively trying to keep gasoline prices low to attract customers worried about how much they are paying at the pump, especially as the benefits of the federal stimulus diminish.
For Erin Leonards, who lives in southwest Louisiana, “gas prices are what are killing me.” She now spends $ 50 to fill her tank these days. âIt used to be $ 30 at most,â she added.
Rising gasoline prices are choking Leonards, who has three young children aged two, four and six. She is in beauty school and works part time at a fried chicken restaurant, earning less than $ 50,000 a year.
Leonards said she bought 18-20 gifts last Christmas for each of her children and also bought gifts for her three godchildren, as well as her nieces and nephews.
This Christmas, she buys just four presents for each of her three children, telling them to choose “something you want, something you need, something you wear and something you read.”
Leonards said her kids got it when she explained that “Santa wanted to try something new this year” with gifts. But she still felt guilty that she hadn’t been able to get them as much as last year.
Rising inflation on basic necessities, combined with a rollback in federal stimulus, will also make it harder for budget-strapped consumers to purchase discretionary goods in 2022, Goldman Sachs analysts said. in a research report this week.
This can impact both retailers who cater to low-income shoppers and the US economy in general.
Next year, âconsumers’ attention will likely shift to [finding] value on key essentials while discretionary spending declines, âanalysts said. Low-income buyers “are likely to remain under significant pressure.”
Julia Horowitz of CNN Business contributed to this article.