How much will holiday gifts cost this year? – Forbes Advisor

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As high inflation persists, consumers may have to compromise on their holiday shopping budget. Data from online coupon company PayPal Honey provided to Forbes Advisor shows that will be a tough task to accomplish – almost all popular holiday gifts are more expensive this year than in 2021.

Creating a holiday shopping budget won’t be enough to control your spending this year. Consumers need to be aware of the added cost of their typical gifts and what it will take to maximize their holiday savings.

Jewelry and hair dryers see big price increases this year

Popular holiday gift categories include electronics, toys, jewelry and apparel. Three out of four of those categories are more expensive this year, according to data from PayPal Honey. Jewelry, in particular, is 31% more expensive this year than in 2021. However, overall clothing prices have fallen.

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If jewelry is on your shopping list, consider how much more you’ll pay this year compared to last holiday season. For example, a 31% year-over-year price increase in the jewelry category means that a pair of earrings that cost $150 last year could go for almost $200 this year.

Demand for jewelry remains high despite rising prices. And some retailers have fewer items in stock than they did last year, which means they can raise their prices to keep up with demand.

It’s not just the expensive categories that are seeing their prices go up. Toys are 10.5% more expensive this year, so some parents may need to eliminate their kids’ wish lists.

Popular electronic freebies like hair dryers and blenders have also seen huge cost increases since last year. For example, a hair dryer that cost $200 last year may now cost $250.

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Ongoing inflation remains one of the main culprits for these price increases. Almost every part of the supply chain continues to see rising costs, from raw materials to manufacturing and production. Retailers say they are offsetting these increased costs by raising the price of these items, but some are taking advantage of the period of high inflation by continuing to raise prices while making record profits. They have little incentive not to: in many product categories, consumer demand has refused to subside.

Alex Williams, CFO of FindThisBest, an online shopping research platform, explains why the price of candles has recently skyrocketed,” pointing out that the rising costs of raw materials, including glass and paraffin, have skyrocketed. Paraffin, which is created from oil, is the most commonly used candle wax.

“Paraffin has not only quadrupled in price, it is also harder to obtain due to supply chain issues caused first by the pandemic and now by the ongoing conflict in Ukraine,” says Williams.

While these products are generally more expensive this year, that doesn’t mean consumers won’t find any items on sale. Retailers are struggling to have too much stock on hand due to delayed shipments during Covid.

“Many retailers have excess inventory that they need to sell, which will be good news for consumers looking for promotions and deals,” says Jill Standish, global head of retail at Accenture, a company world of professional services. According to an Accenture survey of retail executives, 35% of companies are taking special measures or using deep discounts to get rid of excess inventory this year.

This means consumers are bound to see at least some savings.

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3 ways to save on your holiday shopping

Since the prices of popular gifts will be higher due to inflation, the discounts offered by retailers might not be as significant this year. These three tips can help you reduce your vacation spending while dealing with the effects of inflation.

1. Reduce your gift list

Gift lists can start to grow if you buy something for almost everyone you know. Being invited to gift-giving traditions like Secret Santa exchanges can put you on the hook for more purchases than you ever planned on making.

A recent survey from the Affirm payment network found that nearly half (49%) of Americans are skipping Secret Santa this year. Fifty-eight percent also plan not to buy gifts for co-workers, compared to 79% of respondents who bought gifts for co-workers last year.

If you’re reluctant to trim down your gift list or find that there are people you absolutely must buy a gift for, becoming strategic in how you make those purchases can maximize your savings. Consider stacking sales with rewards through online shopping portals that offer cash back, like Rakuten, or paying for your purchase with a rewards credit card (or better yet: double down and do both) .

If you buy gifts with a credit card, do what you can to pay off your balance in full at the end of the statement period so you don’t incur interest charges. Credit card interest rates are at 18.43%, according to the latest data from the Federal Reserve. If you don’t pay off your balance in full, the longer it drags on, the more it will cost over time.

2. Offer gift cards

A common pitfall of holiday shopping is overspending. Shoppers either don’t stick to a planned budget, or they end up putting all of their purchases on a credit card without being aware of how much they’re spending.

If you’re someone who likes to spend on the holidays, consider giving gift cards instead of regular gifts. Gift cards usually have an easy-to-remember round dollar price, which helps you better track your spending and prevents high inflation on the goods and services you would have given away instead. Keep in mind that the recipient may have less purchasing power with this gift card, depending on the price of the good or service.

Read more: How inflation will make holiday shopping even harder this year

3. Beware of shopping scams

Shopping online during the holiday season is a multi-billion dollar company. Criminals know this — and they try to take advantage of the volume by scam buyers off guard.

More than one in three Americans have been victims of online shopping scams while on vacation, according to a NortonLifeLock study, a consumer cybersecurity brand. Victims lost an average of $387 as a result of a scam.

Criminals orchestrate their scams in various ways; those who were scammed said they were victimized via email and social media, as well as text messages or phone calls. These types of scams usually take the more traditional route of using phishing links or asking consumers for their personal information or payment.

But holiday shopping scams also take more sophisticated forms. Scammers will use fake gift cards, phishing links disguised as package delivery information, and even fake vacation job offers to try to trick consumers into giving them money or personal information.

Always check who you are sending money to using resources such as Better Business Bureau (BBB) ​​Scam Database to check if a retail business is trustworthy.

Read more: How to avoid getting scammed while on vacation

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