“The inflation rate is 7.7 percent, so I should purchase items whose prices grew less than that, so I can leverage the relative savings,” said no one ever.
But actually, that’s not a bad strategy, said Sarah Foster, an analyst with Bankrate.com.
“Compare individual inflation rates with the items you’re buying,” Foster said.
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The most recent inflation data, released in November, suggests it’s better to buy shoes or a watch instead of power tools or stationary. And if you give anyone a nice bottle of wine, go bare: skip the gift bag (since gift wrap prices are up more than 13 percent) and let the label do the talking.
Foster, no surprise, endorses budgeting: first look at your finances, then figure out your “hard stop”: the max you can realistically spend. She also said it’s a good time to get creative with gift-giving by organizing no-gift parties, making presents or spreading the costs of gifts among family members.
Here are nine gift ideas that let you use your gift-giving dollars better. (Note: these prices are based on government figures and don’t reflect sales or holiday discounts.)
For grown-ups who enjoy cocktails: Spirits and small batch bitters
Alcoholic beverages enjoyed at home cost around 4 percent more than last year. Wine is up around 3 percent and beer is up 6 percent. But prices for distilled spirits are virtually unchanged.
This means a home-shaken martini will be a better deal than one from your favorite tavern and a better deal than an IPA in your home. Just don’t make eggnog: eggs are a lot more pricey now (see below). For further consideration: gasoline is up 17.5 percent, and home energy costs are up 17.1 percent, so staying home is the slightly better energy option. But if the trend continues, it will take a lot of martinis for those savings to add up.
Even better: prices for certain beverage ingredients have stayed stable for years, said Logan Mitchell, the co-owner of Collins & Coupe, a North Park beverage specialty shop that specializes in selling products by local makers and small batch products.
“Our bitters section overall has maintained pricing over the past year or two,” Mitchell wrote in an email. “In fact, most of the bitters brands we carry haven’t raised prices since we opened in 2017! Overall I see smaller, handmade brands keeping their prices relatively stable vs larger companies … just another reason to shop small!”
(For a splurge, Mitchell recommends handmade copper barware, which “costs a bit more on the outset but is guaranteed to last a lifetime. With the right tools, you’ll almost never need to replace them.”)
For the sweet tooth: Christmas cookies with a twist
Baked goods will set you back a lot more this year. Egg prices are up 43 percent. Flour and mixes: about 25 percent. Sugar and dairy products are up around 15 percent. Margarine and butter prices are both up. (Margarine prices grew more, but it’s still cheaper than butter.)
That doesn’t have to mean Christmas cookies tins for neighbors and friends are a no-go. But could this be the year you make pecan sandies (zero eggs per batch) instead of peppermint meringues (four)? Shelled pecans cost the same as last year, according to Pecan Report.
In small batches — a carton of eggs or two — these hikes don’t hurt much. But if you’re planning a massive cookie operation, that’s when the savings can add up.
For your beloved bling lover: Jewelry or a watch
Eggs cost 43 percent more. Jewelry costs 2 percent more. Therefore, buying a bracelet is a better financial decision than making popovers, right?
Still, if jewelry or a watch is on your “maybe” list and you find the right piece, don’t let fear of inflation guide your decision-making. Jewelry prices are almost unchanged from last year, and they grew a lot less than many other traditional holiday gift items. Prices for watches rose about the same, 2.6 percent.
Here are a few San Diego boutiques and brands for both:
Moon & Sun Studio: https://www.moonandsunstudio.com/
David & Sons Fine Jewelers: https://davidandsonsjewelers.com/
For your tethered teen: Android smartphone
Now is a good time to update your smartphone or get that antsy junior family member their first device, especially if it’s an Android. This is due to a combination of soft demand and an oversupply of chips. Smartphone prices are down 22.9 percent from last year, but this statistic hides certain nuances. A few remarks from a recent Qualcomm earnings report offers two useful insights:
One is that the Android market is softer than the iPhone market, so you might find better deals there. An investor asked whether weaker prices are due to Android or non-Android phones. “I think the adjustment we talked about is primarily Android. So that’s how you should think about it,” said Qualcomm Chief Financial Officer Akash Palkhiwala.
Second, Qualcomm expects the softness in the smartphone market to carry on into next year. “Our market assumption is that the kind of the weak market we’re seeing in the September-December quarter carries on to the rest of fiscal ’23,” Palkhiwala said.
So if you don’t need to replace your phone or your kid isn’t quite yet ready for one, there’s no rush. There’s a good chance today’s lower prices for Androids will last a while.
Another tech tip: TVs are also a lot cheaper this year.
For anyone with feet: Slippers or sneakers
Not sure if you should get grandma a beautiful new hammer or fluffy slippers? Then let these inflation-adjusted stats be your guide: prices for shoes and footwear grew a lot less than the inflation rate: 2.7 percent, compared to 7.7 percent across the board. Prices for men’s shoes grew the least: 2.3 percent.
Meanwhile, tools, hardware and related supplies cost 13.7 more. So maybe Santa will decide to drop off that coveted lathe or buzz saw next year.
Clothes prices, on average, also rose by less than inflation: 4.1 percent. Boys’ clothes are almost even with last year, but girls’ grew 7.1 percent. Prices for formal career items — suits, sport coats and separates — grew the most: around 7.3 percent.
Here are two better deals, if you can spring for them: Prices for women’s jackets and coats are slightly lower than last year. Another good deal: men’s boxers, swimwear and pajamas.
Sean Feeney, the founder of the Solana Beach The Lomas Brand, said when clothing prices are lower than inflation, that’s “an opportunity to take advantage of buying new investment pieces.” These should be comfortable and high quality. It’s also important that they be neutral and timeless, not “loud,” he said. Such pieces withstand volatile fashion trends — so they’re worth paying more for upfront.
For the gracious hosts: Luscious condiments
Maybe you’re baking cookies for your hosts (see above), but if you’re looking for a different take on treats, here are two ways to deliver a thoughtful gift while clinging, as much as one can, to lower prices.
First, skip olives, pickles and relishes, which are up 17.5 percent over last year. A better value choice is tea and condiments, which cost 9 to 10 percent more.
Second, tea towels and other household linens are a relative bargain now. Prices for home linens, not including rugs and curtains, are up 3.1 percent.
One more hint: ditch the gift bag.
A bottle of wine, a book or a potted plant might cost more than a jar of spices or a tea canister, but when you factor in the bag and tissue or wrapping paper, that $23 Cabernet could be the better deal. That’s because gift wrap and stationary cost 13.1 percent more this year.
So: shed the gift wrap, use just ribbon, or opt for wrap-free gifts. Hand-making cards and gift tags is another way to save. (Not disclosed in government data: how much more glitter and vacuum cleaners cost this year.)
For adventure-loving kids: Books or a bike
Toy prices haven’t increased by much: 3 percent. Musical instruments grew by 4.7 percent. Should you postpone that clarinet purchase and instead buy a Squishmallows Mystery Box? Debatable. But this much is clear: Books are a better deal than both, since their prices remain unchanged from last year.
Sporting gear prices rose by about as much as toys, with one exception: Bicycles cost only 1.2 percent more.
Hint: Stay local and shop local, if you can
Airfare is up 42.9 percent, while gasoline is up 17.5 percent. Yes, there are trade-offs, and not every traveler has the option to drive. But one way to save, if one must travel, is to opt for destinations that are reachable by car.
Along the same lines, delivery services are up around 14 percent. Buying early and batching purchases to meet minimums is one way around that. Another: shop local.
Keeping an eye on trends
After months of rising costs have driven people to change shopping habits, defer home purchases and turn to food banks, it seemed like 2022 was going to be the year to take a less-is-more approach to holiday shopping. Actually, the holiday shopping season kicked off with three record-busting days:
According to online marketing analyst Adobe Analytics
- Shoppers spent a record $5.29 billion on Thanksgiving Day. Instapots and “Paw Patrol” character products were some of the most bought items.
- Online shoppers spent a record-breaking $9.12 billion on Black Friday, with many buying “Bluey” character products, drones, the “Call of Duty: Modern Warfare II” video game and Macbooks.
- And on Cyber Monday, shoppers spent $11.3 billion, Adobe said. Hot products included Legos, Hot Wheels, the Madden 23 football video game and smart watches.
Here is where prices for several popular holiday items stand, compared to a year ago:
Here’s what’s up
Eggs: 43 percent
Airfare: 42.9 percent
Gasoline: 17.5 percent
Utilities: 17.1 percent
Bakery products: 15.5 percent
Sugar and sweets: 14.9 percent
Gift wrap and stationery: 13.1 percent
Shipping: 13.9 percent
Nonalcoholic beverages and beverage materials: 12.7 percent
Food: 12.4 percent
Tools, hardware, outdoor equipment and supplies: 10.1 percent
Dining out: 9 percent
Inflation rate in October: 7.7 percent
Cars: 6.9 percent
Toys, games, hobbies, playground equipment: 6.7 percent
Theater and concert tickets: 6.5 percent
Hotel stay: 6.5 percent
Cosmetics: 4.8 percent
Clothing: 4.1 percent
Alcoholic beverages at home: 3.8 percent
Sporting goods: 3 percent
Footwear: 2.7 percent
Watches: 2.6 percent
Jewelry: 2 percent
Here’s what’s dropped
Computers, gear and smart home devices: 3.1 percent
Televisions: 16.5 percent
Sporting events: 17.7 percent
Smartphones: 22.9 percent
Note: Year-over-year price increase from Oct. 2021 to Oct. 2022
Source: Department of Labor, Nov. 2022, curated by Bankrate.com
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