December is one of the busiest months for shopping, with the holiday rush leading to retail sales that often exceed $600 billion nationwide. But a new report from Groundwork Collaborative found the top gifts this season have seen an average 26% price increase from last year, leading to tough decisions for people in the checkout line.
That’s caused 40% of Americans to say they’ll buy fewer gifts this year, and more than 20% to avoid brand-name products, according to survey data collected by the organization. Groundwork’s Director of Policy and Advocacy Elizabeth Pancotti said tariffs have struck the biggest blow to holiday prices, not inflation.
“[26%] is a huge increase. It is nearly nine times the overall inflation rate," she said. "So to the extent that many families were already being crushed by groceries, rent, gas bills, etc. You know, filling the stockings this year is is going to really take a toll on family budgets”
Groundwork’s survey also saw a divide in projected year-to-year holiday spending. Low-income consumers are expected to decrease their budget by $100, while high-income consumers plan to increase theirs by $100. The top 10% of earners now account for more than 50% of all U.S. spending.
"We have really seen kind of a tale of two Christmases this year," said Pancotti. "There was an article that ran in New York Magazine last week talking about gift concierge services, where you can hire someone to find the perfect gift. And typically, the budgets they're shopping for are $10-15,000 for one gift. You know, for shoppers like millions of Americans, that's not anywhere near budget."
The Trump Administration advocated their tariff agenda on the basis of uplifting American businesses and manufacturers. But Pancotti argued that's not happening this holiday season.
"Part of that is because, even if a toy is made here in the United States, not all of the components are necessarily made here," she said. "In Virginia, there's a Lego factory, but many of those things are imported. And in fact, one of the biggest price increases we found was on a Lego set. That is not uniform, but I think small businesses here in the United States are being affected particularly hard by the tariffs. A lot of big companies were able to kind of import stuff before the tariffs went into effect."
Groundwork estimates tariffs could tack on as much as $28 billion in added costs during the holidays, or around $130 per shopper. Some of the popular gifts that saw the highest year-to-year increases include the JBL Clip 4 Speaker at 63%, Tamagotchi Pix at 95% and Bell + Howell LED Tape Lights which rose 114% in price.
