Inflation, Tariffs, and Tight Budgets: How Economic Factors Are Shaping the 2025 Holiday Season

The holidays may be the most wonderful time of the year, but in 2025, many shoppers are entering the season with their budgets top of mind. Economic pressures — from inflation to new tariffs — are weighing heavily on consumers, influencing not only how much they spend but how and when they shop.

According to a recent RetailMeNot survey of 1,100 US shoppers, nearly 8 in 10 (78%) shoppers feel economic strain and say economic factors are impacting their holiday plans — from travel and gifting to overall celebrations.

• 48% say their plans are significantly affected
• 30% say they’re somewhat affected
• Just 22% report little to no impact

The financial squeeze is especially pronounced among younger generations:

• Millennials feel it most acutely, with 61% saying their plans are significantly impacted.
  Gen Z is also feeling the pinch — though to a slightly lesser degree — with 41% saying their plans are significantly affected and another 43% somewhat impacted.

Despite the financial headwinds, shoppers aren’t abandoning the spirit of giving. Instead, they’re getting strategic.

• 35% of consumers plan to spend more than last year, while
• 41% plan to spend about the same, and
• 24% expect to spend less.

That said, few are willing to pay full price. Among those shopping for gifts, 72% say they are unlikely or only somewhat likely to buy at full price, signaling that sales and promotions will be key motivators this season.

How are shoppers saving this year? By combining classic tactics with new tools:

• 65% will shop major sale events like Black Friday and Cyber Monday.
• 58% plan to use coupons or promo codes.
• 51% are relying on cash back or rewards programs, underscoring their growing importance in purchase decisions.
• 35% are trimming their gift lists, while
• 26% will opt for secondhand or resale items.
• And 12% are using buy now, pay later options like Klarna or Afterpay to spread out costs.

Among Millennials, BNPL usage rises to 19%, showing a higher comfort level with flexible payments.

Inflation and tariffs continue to loom large over holiday planning. Consumers’ top stressors this season include:

• Inflation-driven higher prices (53%)
• Tariff-related fees (45%)
• Overspending worries (36%)
• Shipping delays (35%)
• Trouble finding discounts or promo codes (33%)

Tariffs, in particular, are influencing behavior: 40% of consumers say they’d switch brands if tariffs increase prices, while others plan to shop earlier (31%) or shift to domestic retailers (30%) to avoid added costs.

As shoppers look for smarter ways to stretch their dollars, many (52%) are turning to artificial intelligence for help — though trust levels vary.

• 25% say they fully trust AI to find the best deals and gift ideas.
• 27% somewhat trust it, using it as a starting point but double-checking results.
• Meanwhile, 32% remain skeptical or distrustful, preferring expert recommendations or personal research.

Younger consumers are leading the way:

• 36% of Gen Z somewhat trust AI for shopping help, and
• 19% already plan to use AI tools to build their gift lists — up from 13% earlier this year.
  Millennials show even stronger adoption, with 36% saying they fully trust AI and 34% using it as a helpful guide.

In the first part of our Holiday Consumer Report, we saw that shoppers are budgeting more intentionally than ever:

• 58% are setting a holiday budget, and
• 1 in 4 (26%) say they’re sticking to it strictly.
• The average planned spend: $913 total — $611 on gifts for others and $302 on themselves.

And while shoppers are still finding ways to indulge, value clearly drives their behavior. Eight in ten (80%) say cash back offers influence their shopping decisions — with more than one-third (36%) saying these deals strongly determine where and how they shop.

Between inflation, tariffs, and lingering concerns about overspending, 2025 holiday shoppers are choosing strategy over spontaneity. They’re comparison-shopping, leaning on rewards programs, and embracing AI tools — all in pursuit of the best value.

Holiday cheer may look a little more calculated this year, but it’s still going strong — fueled by smart shopping, digital tools, and a determination to make the season bright without breaking the bank.