Inflation, tariffs weigh on consumers as holiday shopping season starts early

It’s barely the start of fall and yet, by some measures, the holiday season is in full swing.

Seasonal décor items — including pre-lit Christmas trees, wreaths, wrapping paper and a popular nativity set — are already on display at my local Costco, near Princeton, N.J., with some items even starting to sell out, according to sales associates.

Consumers began shopping for the holiday season as early as July this year, hoping to make the most of sales events such as Amazon Prime Day, said Brian McCarthy, a principal at Deloitte Consulting.

Nervousness about higher prices was a motivating factor, he said.

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Between lingering inflation and President Donald Trump’s tariff agenda, “consumers are more concerned about their economic outlook,” McCarthy said.

According to Deloitte’s recent holiday retail survey, retail sales will rise again this year, but at a slower pace compared to 2024.

Holiday shoppers are expected to spend $1.61 trillion to $1.62 trillion between November and January, up about 3% from last year, according to Deloitte’s report. The year before, holiday sales grew by 4.2%.

However, this year’s holiday sales will get an extra boost from e-commerce, which is projected to grow between 7% and 9% year-over-year during the 2025-26 holiday season, Deloitte’s survey also found.

“We expect this holiday season to demonstrate the resiliency of consumers as they continue to face economic uncertainty,” Natalie Martini, Deloitte’s vice chair and U.S. retail and consumer products leader, said in a statement.

Yet, heading into the holiday shopping season, 41% of consumers are concerned that gifts will be more expensive this year and 30% said they expect to spend less this holiday than they did last year, according to a separate report by Bankrate.

On average, consumers plan to spend about $1,552 on holiday gifts, travel and entertainment — a 5% drop from the planned holiday spending average in the year-ago period, according to another survey by consulting firm PwC.

Nearly half of shoppers, or 49%, have already begun or plan to begin shopping before Oct. 31, according to Bankrate’s survey, which polled more than 2,500 adults in July.

But for those who aren’t in the holiday spirit just yet, prices near the peak season may not be as high as previously thought.

“Retailers will have to offer discounts to get deal-conscious consumers to spend, and we should see the best deals roll out starting in early October and continue through Christmas,” said Ted Rossman, Bankrate’s senior industry analyst.

“The impact of tariffs for the upcoming holiday season is already baked in because for the most part, retailers have already acquired the items they are going to be putting on the shelves for the holiday season or they are already in transit,” said Marbue Brown, a consumer trends analyst and author of “Blueprint for Customer Obsession.” 

According to Deloitte’s McCarthy, many retail buyers placed their holiday orders earlier than usual this year, which can make it harder to manage inventory but helps guard against price shocks.

Tariff delays also “allowed a lot of retailers to get holiday merchandise in early at pre-tariff pricing,” Rossman said. As a result, “the holiday season could largely be insulated from tariff price hikes.”

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