As the holiday shopping season reaches its peak, a striking trend has emerged: rising prices and the high cost of goods are dampening the seasonal spirit for many consumers. A recent CNBC survey finds that elevated costs across a range of products are compelling shoppers to pull back on spending this year, even during a period that typically sees robust retail activity.
The Cost Crunch Behind Holiday Decisions
Consumers are facing a landscape of higher prices shaped by inflation, tariffs on imported goods, rising interest rates and broader cost-of-living increases. These factors have combined to make everyday goods and festive purchases more expensive, stretching household budgets tighter than in recent years.
While specific survey numbers from CNBC highlight a clear behavioral shift, broader reporting and industry data support the narrative: a significant portion of holiday shoppers are planning to spend less or be more selective in their holiday purchases because prices have climbed. For example, social coverage of the survey notes that shoppers cite higher prices as a reason for scaling back spending this holiday season.
Consumer Behavior: Less Spending, More Scrutiny
The rising cost environment is not just an abstract economic concept—its effects show up in shoppers’ actual plans:
- Reduced spending intentions: A related Bankrate survey found that a substantial share of shoppers expect to spend less this year than last, with only about a quarter planning to increase their holiday budget.
- Earlier and more cautious shopping: High prices are prompting some consumers to start holiday shopping earlier than usual to lock in deals and spread out expenses over a longer period.
- Priorities shift: Faced with the choice between essentials and discretionary gifts, many are prioritizing necessities and looking for bargains rather than splurging. This aligns with broader trends of value-focused purchasing and deal hunting.
Why Prices Are So High
Several economic forces are contributing to the surge in costs that consumers are feeling:
- Tariffs and import costs: Recent analyses suggest that tariffs on imported goods,covering categories from electronics to apparel,have pushed retail prices higher, making many common gift items noticeably more expensive than last year.
- Persisting inflation: Even as headline inflation has eased from peak levels, prices remain elevated compared to pre-pandemic norms. This persistent inflation means households’ purchasing power is effectively lower in real terms.
- Daily essentials crowd out discretionary spending: With staples like groceries and utilities consuming more of consumers’ budgets, less disposable income remains available for gift giving and festivities.
The Broader Retail Picture
Despite these cost pressures, overall retail sales for the season may still grow modestly,reflecting a mix of cautious spending and a large volume of shoppers hunting competitive deals. For instance, industry forecasts show holiday sales growing year-over-year, though underlying patterns suggest value-seeking behavior and selective purchasing.
This apparent paradox,spending continuing to occur but with consumers more cautious and selective,underscores the complexity of today’s consumer mindset. Shoppers are not simply abandoning holiday purchases; rather, they are recalibrating how, where, and on what they spend their money.
What This Means Going Forward
As the season unfolds, both consumers and retailers are adapting:
- Shoppers are stretching budgets with early deals, discount hunting, and rethinking gift lists.
- Retailers are responding with promotions, bundling strategies, and targeted value messaging to appeal to price-sensitive buyers.
What’s clear is that the holiday season of 2025 will be remembered not just for gifts under the tree, but for the economic realities shaping how those gifts were bought.