Rising prices and widespread uncertainty are pushing retailers and shoppers alike to approach the holiday season with caution, according to Retail Dive. The source reports that careful planning has become essential for many U.S. households as the cost of everyday goods continues to weigh on budgets.

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Research from The Financial Health Network and the University of Southern California found that fewer lower-income households managed to pay all their bills on time over the past 12 months than a year earlier, and more than 30 percent of those households are dealing with debt at unmanageable levels. Separately, a survey by the cash-rewards app Ibotta found that 45 percent of consumers describe their household finances as insecure going into the season, while more than 70 percent say saving money will be a priority this year.

Price increases have been steep since January 2018, according to Numerator. Low-income consumers face prices that have climbed by more than a third, while high-income consumers are paying over 30 percent more. Accenture research indicates consumers also expect gifts and other seasonal items to cost more this year.

Dat Ngo, an accountant and personal finance adviser at Vetted Prop Firms, said by email that many consumers are drawing on savings or turning to high-interest credit cards to cover everyday bills, which makes holiday expenses feel heavier. He advised some families to set a firm holiday budget, noting that the real difficulty is not a single expensive month but entering January with credit card balances that take months to pay off while regular expenses continue. A smaller holiday, he added, is easier to recover from than several months of costly debt.

Accenture found that more than 30 percent of U.S. consumers expect their holiday budgets to be larger than a year ago, and more than half of those who plan to spend the same or more attribute that to everything being more expensive. Kelly Askew, global retail industry lead at Accenture, said during a virtual event held by Retail Dive earlier this month that consumers are having to be more thoughtful and intentional about where, why and how they spend.

As they pay more for essentials such as groceries, fuel and other bills, consumers are approaching their holiday shopping lists from different angles. Ibotta research shows more than a third of shoppers bought holiday items during summer sales events, and 30 percent expect to start earlier than they did last year. According to Accenture, more than twice as many people did holiday shopping over the summer months this year compared with last year.

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https://www.indexbox.io/blog/holiday-spending-caution-rising-prices-push-shoppers-to-budget-carefully/