Inflation did little to dampen consumer holiday spending, data finds

New data from Mastercard showed consumer spending largely kept up with inflation during the holidays. 

According to Mastercard, consumer spending grew 3.1% during the 2023 holiday season compared to the same time in 2022. Spending at restaurants jumped 7.8%, while expenditures on apparel grew 2.4% and grocery spending increased 2.1%. Electronic spending had a 0.4% drop during this holiday season, while jewelry expenditures declined by 2%. 

The data largely reflected changes in inflation. According to the latest consumer price index, inflation rose 3.1% for the 12-month period ending in November. Food consumed away from home increased 5.3% in the last year, while food at home jumped 3.3%. 

Apparel costs rose 1.1% in the last year. Jewelry prices increased by 2%, while video and audio products decreased by 5.5%, according to the consumer price index.

Mastercard indicated it was another strong holiday season for retailers as the U.S. maintained an unemployment rate below 4% since January.

“This holiday season, the consumer showed up, spending in a deliberate manner,” said Michelle Meyer, chief economist with the Mastercard Economics Institute, in a press release. “The economic backdrop remains favorable with healthy job creation and easing inflation pressures, empowering consumers to seek the goods and experiences they value most.”

The data also was particularly strong for online commerce. Retail spending online increased 6.3%, while in-person spending went up a mere 2.2%. 

Experts say retailers began offering holiday-related sales earlier this year, helping revenue this holiday season. 

“Retailers started promotions early this season, giving consumers time to hunt for the best deals and promotions,” Steve Sadove, senior adviser for Mastercard, said in a press release. “Ultimately it was about getting the most bang for your buck as consumers spent on a variety of goods and services, resurfacing spending trends from before the pandemic.”

Retailers could still see a lot of traffic in the coming days. According to Sensormatic Solutions, two of the top 10 shopping days of the year will come during the week between Christmas and New Year’s Day. Tuesday is expected to be the sixth-busiest shopping day of the year, while Saturday is projected to be the eighth-biggest day for shopping in 2023.