News Column

Shoppers: Ready for the Holiday Squeeze?

Oct. 29, 2012

Bethany Clough


The avalanche of spending that starts with Halloween and ends with holiday shopping leaves a lot less cash in your pocket.

Spending over the next few months will be affected by falling gasoline prices, rising food costs and plenty of sales at stores. It all comes at a time when shoppers still are tightening budgets.

"There's no question that it's still important to consumers to trim the family budget and make sure they cut corners where they can and use coupons and shop for promotions," National Retail Federation spokeswoman Kathy Grannis said.

First, the good news.

Gas prices are expected to continue their downward tumble.

Problems at oil refineries that, coupled with low gasoline supplies, led to skyrocketing prices have been resolved, AAA spokesman Cynthia Harris said.

Prices have dropped from the citywide average price in the $4.60 range earlier this month, falling an unusual 20 cents in one week recently. They should drop a penny or two a day until at least Thanksgiving, Harris said.

If no surprise supply problems interrupt that decline, prices should be nearer, though possibly still above, the $3.67 price of late November 2011.

The average price of a gallon of unleaded in Fresno was $4.122 Saturday. Several gas stations already are selling below $4, a price many drivers haven't seen since spring.

But the money you save on gas may shift toward food.

Turkeys and other holiday food items are likely going to cost more. Egg prices already are climbing. Sanger-based Mary's Turkeys probably will cost about 10% more this year, said David Pitman, whose family runs Mary's Turkeys.

A drought earlier this year led to a smaller-than-expected corn crop, pushing up the price of corn. Because animal feed has corn in it, farmers who produce turkeys, chicken, milk, eggs and other animal products are paying more. Those costs will pass to shoppers at the grocery store.

"There's no question that we're going to see higher prices," said Ricky Volpe, research economist with the U.S. Department of Agriculture's Economic Research Service.

When consumers will see that price spike is still up in the air, though there is a good chance it will be in the next few months, he said.

Shopping for holiday gifts always takes a big chunk of change, but shoppers will benefit from retailers competing for their money.

The average American is expected to spend $749.51 on holiday merchandise this year, according to a survey by the BIGinsight research firm. That's only $9 more than last year, a sign that shoppers still are looking for bargains.

About 80 percent of shoppers in the survey said they planned to spend less this year. More shoppers will hit up discount stores than any other type of store, including department stores and other clothing stores.

Retailers know shoppers are pinching pennies, and "they'll respond with being very aggressive with their promotions this year," Grannis of the national retail federation said.

That translates into lots of deals for shoppers, she said.

There will be plenty of sales. More stores, including Best Buy, Target and Toys "R" Us, have announced they will match other stores' prices. Free layaway is being extended. And many retailers are starting promotions, such as free online shipping, earlier than ever.

"Retailers are very much looking forward to getting the holiday season started and getting their promotions in front of shoppers because they know it's going to be a very competitive shopping scene this year," Grannis said.

Source: (c)2012 The Fresno Bee (Fresno, Calif.). Distributed by MCT Information Services.

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