You’re reading Entrepreneur United States, an international franchise of Entrepreneur Media.
This story originally appeared on NerdWallet
If you’ve noticed price hikes at the gas pump, grocery store or clothing retailer lately, you’re not dreaming. Rising prices may complicate your holiday gift-buying, meal-planning and travel.
NerdWallet – NerdWallet
What you’re experiencing is inflation, which simply means that the prices of goods and services are increasing. When prices rise faster than people’s wages, inflation becomes “a tax that’s slowly eroding away the buying power, your budgets and things around you,” says Mark Bergen, the James D. Watkins Chair in Marketing at the University of Minnesota.
So exactly how fast are prices increasing? The latest data from the Bureau of Labor Statistics shows a 6.2% increase in the prices for all goods and services between October 2020 and 2021. For context, the cost for all items increased only 1.4% between December 2019 and 2020. Bergen says prices are rising at a rate that “we haven’t seen in the U.S. at least for about 40 years.”
What does inflation mean for Black Friday deals?
Rising prices mean that this year’s Black Friday deals might not be as good as previous years. A 2021 Deloitte holiday retail survey shows that about half of retail executives who responded said they expect product prices to increase this year, and 57% said they expect these price increases to eat into the promotions they give shoppers.
Bergen highlights a few strategies retailers might use that shoppers should be aware of:
- Running sales for a shorter period of time. Shorter sales mean fewer people will be able to take advantage of those prices. For example, Amazon had Apple AirPods Max over-ear headphones for as low as $429.98, but that sale didn’t last long. More recently the featured price has been $479.
- Putting select items on sale but keeping the price of accessorizing products high. There might be a great sale on a popular doll, for instance, but the accessories are priced higher.
- Increasing surcharges and extra fees. Retailers might increase delivery fees or charge customers to return items by mail.
- “Shrinkflation,” or shrinking the size of products while keeping prices the same. The tactic keeps costs down without customers noticing too much. You might pick up your favorite shampoo without realizing the bottle now holds 8 ounces instead of 10 for the same price.
What do these retailer strategies have in common? They’re all “ways of increasing prices that are harder for customers to notice,” Bergen says.
Ways to combat inflation as you shop
While inflation might seem like a problem that’s out of your hands, there are ways you can combat rising prices in your budget.
Do your price research — but do it wisely
Inflation can create extra work for consumers who shop around and do price comparison research to get the best deal. If you “have a limited pool of resources,” says Bergen, “spend your time and energy in the places that have the most return for you.”
He suggests “triaging your shopping” into either the big-ticket items or the most essential items and starting your price research from there. You can also try narrowing down your research to a few stores and finding the best deal among those; cutting down on the “noise” from lots of retailers can fight against decision fatigue.
Track the price on gifts you definitely want to snag, and look for price guarantees. For example, Target features the KitchenAid 5-quart Professional stand mixer for $219.99 in its Black Friday ad and had a similar price earlier in the fall, but reverted to the original price ($429.99) in between. If you bought the mixer at the higher price, you can request a price match until Dec. 24.
But price matching won’t completely offset the effect of inflation. For instance, that KitchenAid mixer sale price is still $20 higher than it was last year.
Lastly, read the fine print and make sure you’re getting the make and model you want. For example, Target is showcasing the Amazon Fire 8 Kids Edition in its Black Friday ad, but there is a newer model on the market. A deal might not be as good as it seems if it’s for older models, especially for electronics.
Consider making tradeoffs to offset rising prices
When it comes to people’s budgets, Bergen notes ways consumers have historically pushed back against inflation:
- Spend money on necessities rather than luxuries. In this case, you might get a new vacuum cleaner to replace the one that just broke rather than the luxurious robe you’ve been eyeing.
- Buy a less-expensive version of an item. Take the Apple AirPods, for example. To cut costs, you might consider buying an older model (the second generation is on sale at Best Buy for $129.99), skipping out on the Magsafe Charging Case (spend $129.99 instead of $159.99) or buying a refurbished newer model (on sale for $89.99 at Best Buy).
- Swap store brand items for name brands. An obvious place for this is groceries. When stocking up on food for holiday parties, consider the store brands offered by many grocery chains. Members of warehouse retailers also can find cost-saving alternatives to favorite name brands, such as Costco’s Kirkland Signature brand.
- Simply buy less. One of the easiest ways to fight the costs of inflation is to cut back on spending altogether. Suggesting a gift exchange where you buy only one gift for family members instead of many, for example, can help fight the pressure of rising costs for you and your loved ones.
The article What to Do When Inflation Cuts Into Your Black Friday Deals originally appeared on NerdWallet.