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From prepping the big meal for your family and friends to finding the perfect gifts, expenses already tend to rise during the holidays. But with the continued rise in inflation, people are left wondering how this season will differ from holidays past. To better understand how your holiday shopping could change this year, let’s take a closer look at inflation’s effect on the cost of goods.
Inflation and the CPI
One of the most common ways to measure the effects of inflation is through the Consumer Price Index (CPI). The CPI is the change in price over time for goods and services, including rent prices and grocery items. It’s calculated by the US Bureau of Labor Statistics, who collects and averages the prices of about 80,000 specific items from around the country each month. Producers and service providers can use the CPI to price their items and services according to the current inflation or deflation rate. And consumers can use the CPI to help make more informed financial decisions, seeing for themselves how their buying power is rapidly changing.
Though inflation doesn’t last forever, prices don’t appear to be dropping any time soon. The CPI runs about a month behind due to the time it takes to collect the data, but October’s findings showed a 0.4 percent increase in prices across the board for the month and a 7.7 percent increase from this time last year. Shelter, food, and medical expenses continue to rapidly rise. As a result, while you begin prepping for your holiday meal shopping, you’ll likely notice that the cost of common items like turkey, ham, potatoes, and corn have all risen significantly. The price for turkey alone has increased 16.9 percent from last year.
With higher prices, it’s no wonder that Wells Fargo found that consumer spending outgrew consumer earning in September, with spending increasing by 0.3 percent and personal savings dropping by 0.3 percent. This means that many people are spending at a rate faster than what they can bring in. While income and spending numbers have yet to be released for October and November, it’s a hard truth that everything will cost more this holiday. So before you start seriously shopping for holiday meals, gifts, and decorations, it’s more important than ever to consider how you can shop smart and end the year with financial security.
Save where you can
A key way to spend less this holiday is to plan ahead with what you think you’ll need to buy. You can create a master shopping list with the food you’re going to need, the gifts you’ll want to purchase, and any decorations you’ll want to add to your home, and then adjust accordingly as time goes on. Having a clear idea of the items you need will also allow you to check for deals and take advantage of holiday sales. Many items are discounted during this time of year, which means you should still be able to find the perfect gifts for your loved ones at a reasonable cost. And if you find certain food items are on sale, don’t be afraid to change your holiday meals around and get creative with your recipes.
Cutting back on your holiday spending doesn’t mean that you can’t still have a wonderful time with family and friends. These adjustments can simply help ensure that you’re also able to increase your savings this season.