Inflation, though slowing, still impacting holiday gifting, travel plans

Despite slowing inflation, high costs are still impacting consumers’ travel and spending plans for the holidays.

According to new data from investment platform M1, 20% of survey respondents said they would be spending less on their holiday travel plans this year compared to 2022, with 7% ditching holiday travel plans altogether, citing inflation and rising costs as the chief reason. One-in-10 of those who said they'll be spending less on travel are opting for train or car travel as opposed to air travel, and 15% plan to rely on free activities.

More than four-in-10 (43%) of those surveyed said they planned to spend less on luxury purchases like jewelry, clothes and spa purchases this holiday season. Three-in-10 (30%) reported plans to cut back on their restaurants and dining spend. Another 30% of people say they will still spend more on everyday necessities like food and personal care items this holiday season.

According to recent data from the U.S. Bureau of Labor Statistics,  food at home index, or how much will be spent on grocery items, increased 2.1% over the past year. The cost of shelter is up an average of 6.7%, while transportation services costs are up 9.2%.

"As we head into the new year, this new data reflects a shift towards more conservative money behavior as consumers navigate the challenges that come with inflation and rising costs this holiday season,” said Brian Barnes, founder and CEO of M1. “By understanding these evolving spending patterns, we can help individuals make informed financial decisions, ultimately building their wealth."

Other findings from the survey include:

• Of those cutting back on spending this holiday season, nearly two-in-10 respondents (19%) are reallocating those funds to investments and 13% to savings accounts. 
• Just 7% of respondents reported that they'd be reallocating these saved funds toward vacations, experiences, or larger purchases like homes or cars. 
• One-in-10 respondents are making less income than last year, so they do not have additional funds to reallocate.
• Nearly half (48%) of survey respondents plan to give cash this holiday season, with 10% planning to give contributions to a child's 529 plan, and 8% planning to give gold, silver or another precious metal. Only 4% plan to give cryptocurrency or NFTs as a gift.