Over Third Expect Rising Food Prices To Cut Into Holiday Spending, Survey Finds
More than a third of consumers expect rising food prices to cause them to cut back on holiday spending, a new survey showed on Tuesday.
A total of 28.4 percent of the 1,000 people surveyed by Americas Research Group said that rising food costs would cause them to cut back on their Christmas shopping "somewhat," while another 7.2 percent said that they would "most definitely" cut back. The question was one in a series posed by Reuters and included in the research group's latest survey.
Manufacturers and producers have sharply raised food prices this year to cope with soaring costs for commodities ranging from soybeans and corn to peanuts.
While some of those commodity prices have retreated in recent weeks, the high prices on store shelves are expected to remain.
This is not the first time that rising food prices have taken some of the joy out of Christmas, America's Research Group President Britt Beemer said, citing a survey two years ago that showed 31 percent planned to trim spending.
The difference is that back then, 60 percent of people did not know where they would cut back. Now, consumers have grown so used to living within limited means that they already know how they plan to spend less.
"Everybody could tell us what they could do, so this 36 percent of people have thought about it," Beemer said.
A total of 58.1 percent who will cut back said they would spend less on each gift they bought, while 26.1 percent said they would buy gifts for fewer people. Almost 9 percent said they would not buy a gift for their spouse and 6.2 percent said they would make a gift rather than buy it.
Retailers are expected to be fighting over market share in a holiday season where sales are expected to only rise in step with inflation.
The National Retail Federation earlier this month forecast that U.S. retail sales would increase 2.8 percent in November and December, excluding cars, gasoline and restaurants.
One strategy more retailers are adopting is offering layaway -- letting consumers put aside goods and pay for them over time before Christmas.
More than 17 percent said that they will use layaway, and Wal-Mart Stores Inc, the world's largest retailer, is getting by far the biggest share of those shoppers. A total of 11.2 percent of those surveyed said they would use Wal-Mart's layaway program. The world's largest retailer brought back layaway for toys and electronics this season for the first time in five years.
Planned layaway use is far higher than Beemer has seen in past surveys.
"It could be because Wal-Mart is getting back into the game or it could be that Wal-Mart, through their research, saw that people wanted it, so they jumped in to get their fair share," Beemer said.
Shoppers are also continuing to cut back on credit card use, with 39.7 percent saying they will use credit cards less and only 5.2 percent saying they will use credit cards more than last year.
Computer tablets like Apple Inc's iPad and Amazon.com Inc's Kindle Fire are expected to be among the hot gifts this year, and 18.6 percent of those surveyed said they would buy one.
Tablets look like one category for which consumers are willing to pay up, as 11.8 percent plan to buy an iPad and 3.7 percent plan to buy the less expensive Fire.
"Americans are still brand-name driven, when the company deserves it," Beemer said.
(Reporting by Brad Dorfman in Chicago, editing by Gerald E. McCormick)
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