Low-income shoppers are hit hard by inflation as holiday budgets shrink

NEW YORK (AP), Emarilis Velazquez has been paying higher prices for everything, from clothing to food.

Low-income shoppers are hit hard by inflation as holiday budgets shrink

In recent months, her monthly grocery bill has risen from $650 to nearly $850. She has switched to a lower-priced detergent in order to save money and look for cheaper cuts of meat. She saves coupons and shops at thrift stores for her children's clothing instead of Children's Place.

She's cutting back on gift giving for the holidays. She will spend $600 on her children, instead of $1,000, and won't buy gifts for family members.

The 33-year old mother of two from Boardman, Ohio said that it was stressful. Her husband makes $30,000 per year by making pallets for stores. You want to give everything to your children, even though Christmas is all about you. They expect it. It's hard to tell them what they want.

While retailers may expect record sales for the holiday season, low-income customers are still struggling because they have to bear the brunt the highest inflation rates in 39 years.

Last week's government report that consumer prices rose 6.8% in the past year revealed that the biggest price increases have been for necessities like food, energy and clothing.

The overall trend is to change American shopping habits due to rising prices. Some people view them as an inconvenience and delay building a deck. This is because of higher lumber costs. For lower income households, however, it's a difficult decision to make. They have to decide if they can afford food or if they will have to cut back on gifts for their children for the holidays.

C. Britt Beemer (chairman of America's Research Group), stated that inflation is destroying the pockets of low-income households. He estimated that low-income households are reducing their holiday spending by 20% compared to a year ago. They will have to choose what they want to buy and how they're going about eating.

Some retailers who built their businesses on the lure of low prices have started to boost them. Dollar Tree, the last truly dollar store, is raising its prices to $1.25 per majority of its products due to higher freight and goods costs. Velazquez claims that 25 cents per item is an excessive amount, so she will have to reduce impulse purchases there.

The National Retail Federation claims that this year's holiday shopping season will surpass its 8.5% to 10.5% sales growth forecast despite inflation pressures, as well as supply chain disruptions due to the new COVID-19 Omicron variant.

A poll conducted by The Associated Press-NORC Center for Public Affairs Research found that around three quarters of Americans will give gifts to family and friends to mark the holiday season. The rising cost of gifts has not gone unnoticed. About 6 out 10 Americans believe holiday gift prices have risen more than usual. Only 2 percent of Americans disagree. About 2 out 10 people say that they haven't purchased gifts in the past year.

4 out of 10 Americans claim it is harder to get the gifts they want this year. It's not easy or difficult for half of those who say so, but it isn't easy for the rest.

However, those with lower incomes are most affected by the cost pressures.

The 40% of households earning between $50,000 to $100,000 and the 45% in those earning less than $50,000 a year say that it is harder to afford gifts, while 30% of households with higher incomes report being able to afford them.

It was difficult enough for low-income families to save money to buy gifts a year ago and five years ago. It is even harder now," Ted Rossman, Senior Industry Analyst at CreditCards.com said. A survey conducted in October revealed that a large number of low-income individuals were opting out completely of holiday gifting due to higher essentials prices.

Food pantries like the Shiloh Church in Oakland are feeling the financial strain. According to Jason Bautista who manages the food pantry, Shiloh has noticed a rise in people coming into the store to get a weekly box of essentials and to shop at the market for food.

Bautista was inspired to bring more holiday toys in for the annual giveaway set. This year, it will donate approximately 2,000 toys to families, compared to 1,500 last year.

Bautista stated that families who would normally shop at Safeway cannot afford it due to their fixed incomes. Their dollar is not stretched."

Miriam Canales (34), from Oakland has been regularly going to Shiloh every week for free food ever since the outbreak. Her husband lost his job in spring 2020 as a chef at a closed restaurant. Although he was offered a job at another restaurant, he works on average only six hours per week.

She stated that higher food prices have increased financial stress and that she won't be purchasing gifts for her children aged 13 and 6. She plans to shop at Shiloh Church on Saturday for toys.

Canales said she is grateful for her husband's work and her daughter's recovery after brain radiation that left her with epilepsy last year. She is now healthy.

Canales stated, "I feel blessed."