As the holiday season approaches, inflation is affecting how consumers shop, what they buy, and how retailers plan for the busiest time of the year. Rising prices for groceries and everyday essentials are forcing households to adjust spending habits and adapt their holiday shopping plans. Understanding these shifts is essential for businesses aiming to navigate the season successfully.
Here’s a closer look at how inflation will affect consumer spending this holiday season.
Tighter Holiday Budgets
The impact of inflation on household finances has created more budget-conscious consumers, where even those with stable incomes are approaching holiday spending with heightened caution. Rising costs for essentials are forcing many families to rethink not only how much they spend but what they spend it on. Consumers who once set aside generous holiday budgets are now trimming back with 35% of consumers planning to cut back on spending, according to AlixPartners’ 2025 U.S. Retail Holiday Outlook.
Consumers are staying within their budgets by shopping for more affordable brands and purchasing a significant number of gifts on sale or promotion. Nearly 40% of consumers said they intend to buy 50% or more of their holiday purchases on sale. Many retailers are launching early sales events and promotions, enabling shoppers to spread purchases out over several months to better manage their budgets. Staples is the latest retailer to offer customers an early start to their holiday shopping. The retailer is now holding its first-ever Easy Deal Days running through Oct. 11, and offering up to 40% off on over 1,000 items for the office and home.
More Value-Driven Purchases
Economic pressures are driving consumers to prioritize value-oriented, efficient shopping destinations over more premium retail experiences and opting for private-label brands or smaller gifts rather than premium or luxury items. Discount retailers, online marketplaces, and private-label brands are seeing increased traffic as shoppers look to stretch every dollar. Mass merchandisers bounced back this year to capture 62.2% of holiday shoppers’ plans. The resurgence reflects consumers’ demand for competitive pricing, extensive product selection, and convenient one-stop shopping experiences that mass merchandisers deliver effectively, according to JLL’s 2025 U.S. Holiday Shopping Survey.
Smarter Shopping
Inflation has accelerated the shift toward more strategic shopping decisions. Consumers have become far more deliberate about where and how they shop. They are researching extensively before purchasing, often comparing prices across multiple retailers online. Strategic initiatives like limited-time offers and product bundles can attract price-conscious shoppers. Integrating online and in-store shopping provides greater convenience while ensuring consumers can find the best deals. Price comparisons, coupons, cashback offers, and loyalty programs are becoming central to holiday shopping.
Despite tighter budgets, shoppers will spend more for holiday gifts when the value feels worth it, according to a new survey from deal platform RetailMeNot. Deep discounts, cashback rewards, and easy-to-find promo codes are the top triggers pushing people to spend more than planned. Cashback rewards are especially powerful for holiday shoppers, as 80% of consumers say it influences their choices. Retailers face higher competition for each sale and must differentiate themselves through features such as loyalty rewards, same-day delivery, or flexible return policies to increase customer engagement and enhance shopping experiences.
While inflation is reshaping holiday spending, it also presents an opportunity for brands and retailers to innovate. Companies that understand evolving customer preferences and provide meaningful solutions that fit both their budget and lifestyle can thrive during the holiday season.
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