Most Consumers Plan to Cut Holiday Spending Amid Ongoing Inflation

The vast majority of consumers – 84% – intend to reduce their spending over the next six months, particularly on non-essential items, as they prepare for a potentially expensive holiday season.

According to recent data, shoppers are bracing for higher costs due to lingering tariffs and overall inflation, and are adjusting their budgets accordingly. While consumers still expect to spend an average of $721 on gifts this year, down from $814 in 2024, more than half plan to rely on credit cards to cover those expenses – a move financial experts caution against. “Ideally, it’s best to avoid debt during the holiday season,” said Casey Brueske, community education development specialist at PenAir Credit Union. “Debt during the holidays carries over into the new year, putting you in a deficit before you have time to make your financial resolutions.”

Financial advisors recommend proactive budgeting to mitigate potential debt. Creating a holiday “sinking fund” – regularly setting aside money specifically for holiday expenses – can help avoid dipping into funds allocated for other needs. Experts also suggest auditing current expenses to identify areas for reduction, such as dining out or unused subscriptions, and redirecting those savings. Consider placing your savings in a high-yield savings account to maximize earnings. For those looking for more ways to save, exploring creative holiday savings tips can also be beneficial.

Strategies like starting gift shopping early to take advantage of sales and price-match guarantees, and even considering a temporary side hustle to earn extra income, are also being encouraged. Brueske added, “It’s easy to get caught up in the spirit of giving, but setting a spending limit can make the holidays far more enjoyable.” This trend in cautious spending reflects broader economic anxieties as many households continue to navigate a challenging financial landscape.

Officials urge consumers to prioritize financial well-being during the holidays and to make informed spending decisions to avoid accumulating debt in the new year.