Inflation squeezes holiday budgets for low-income shoppers

AP Retail Writer

NEW YORK — Emarilis Velazquez is paying higher prices on everything from food to clothing.

Her monthly grocery bill has ballooned from $650 to almost $850 in recent months. To save money, she looks for less expensive cuts of meat and has switched to a cheaper detergent. She also clips coupons and shops for her kids’ clothing at thrift stores instead of Children’s Place.

For the holidays, she’s scaling back on gifts. She plans to spend $600 on her three young children instead of $1,000, and she won’t be buying any gifts for relatives.

“It’s stressful,” said the 33-year-old stay-at-home mother from Boardman, Ohio, whose husband earns $30,000 a year making pallets for stores. “You want to give it all to your kids, even though (Christmas) is about family. They still expect things. It is hard that you can’t give them what they ask for.”

Retailers may be forecasting record-breaking sales for the holiday shopping season, but low-income customers are struggling as they bear the brunt of the highest inflation in 39 years.

The government’s report last week that consumer prices jumped 6.8% over the past year showed that some of the largest cost spikes have been for such necessities as food, energy, housing, autos and clothing.

Overall, rising prices are changing shopping habits for many Americans. For some, they’re a mere inconvenience, pushing them to delay building a deck on their house amid higher lumber prices. But for lower-income households with little or no cash cushions, they’re making harder choices such as whether they can put food on the table or if they’ll have to drastically scale back on holiday presents for their children — or forgo them completely.

“Inflation is devastating the pocketbooks of low-income households,” said C. Britt Beemer, chairman of the America’s Research Group, estimating that low-income households are cutting back their holiday buying by 20% from a year ago. “They are going to have to decide what they are going to buy and what they’re going to eat.”

Even some retailers that built their businesses around the allure of ultra-low prices have begun boosting them. Dollar Tree — the last true dollar store — is increasing its prices to $1.25 for a majority of its products because of higher costs of goods and freight. Velazquez says that 25 cents extra per item adds up, and the increase will force her to scale back on impulse buying there.

Despite the inflation pressures — as well as supply chain disruptions and the new COVID-19 omicron variant — the National Retail Federation says this year’s holiday shopping season appears to be on track to exceed its sales growth forecast of between 8.5% and 10.5%.

According to a poll by The Associated Press-NORC Center for Public Affairs Research, about three-quarters of Americans say they will be giving gifts to friends and family to celebrate the winter holidays this year. But the rising costs have not gone unnoticed. About 6 in 10 Americans say holiday gift prices are higher than usual, while only 2 in 10 say they are not. Roughly 2 in 10 say they did not purchase gifts recently.


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