Is global inflation coming?
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(CNN Business) -
Higher gas and grocery prices hit Jen Kendra's finances, and she's had to make some tough concessions this holiday season.
Your children will receive smaller gifts.
The rest of the family will not receive any.
Kendra, who lives with her husband and two young children in the Chicago suburbs and who works part-time as a bank teller, pays double to fill her gas tank each week.
Finally, gasoline and natural gas prices are going down
"I have seen a rebound in the prices of food and gasoline," he said.
When you pass the gas station near your home, you often find yourself yelling at the large billboards listing the latest prices.
Kendra describes her family as lower-middle class.
You have started to use coupons more often to buy food and shop more often at discount stores like Aldi to get the lowest prices.
Sometimes that means driving longer distances to find cheaper food.
"Anywhere I can find a deal or a bargain, I'm testing it."
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The Kendra family is struggling to pay for Christmas presents.
Higher gas and grocery prices are taking their toll.
Federal stimulus checks have helped his family, but the money ran out earlier this year.
Her $ 550 a month expanded child tax credit has also been a boost and goes to pay for her youngest son's preschool and credit card bills for food and gas.
Kendra and her husband saved up to buy a Nintendo Switch for their children, ages seven and four, but returned it two weeks later because their water heater unexpectedly turned off and cost them $ 1,500.
"Not being able to provide them with that Nintendo Switch was heartbreaking for me," he said.
Instead, he turned to the Facebook marketplace for the first time to buy used toys, and he also got Play-Doh and Hot Wheels for kids.
The couple will not be exchanging gifts with each other this year or buying gifts for their parents and family.
"Things are very difficult at the moment," he said.
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They are hardly alone.
Rising prices squeeze the budgets of millions of Americans, leading many families with financial difficulties to withdraw gifts.
Prices rose 6.8% in November from a year earlier, the highest level in 39 years.
Grocery prices have risen 6.4% annually and meat was 16% more expensive in November than a year ago, while fish and seafood prices increased 8%.
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Energy prices were up 33.3%, including a whopping 58% rise in gasoline.
But not all buyers are affected equally by higher prices.
Higher-income consumers - who have more cash available for discretionary purchases - are better able to withstand high inflation episodes than lower-income buyers, who spend a higher percentage of their income on fuel and commodities.
This leaves them more vulnerable when food or gas prices rise, reducing the amount of money they have left to buy holiday gifts such as electronics, games, or non-essential items.
Although wages are rising rapidly, they are still behind inflation.
"Inflation has been most painful for lower-income households," Bank of America economists said in a research report last month.
Rising commodity prices will impact budget constrained shoppers spending on holiday gifts, which are also more expensive than last year.
Clothing cost 5% more in November than a year ago, jewelry rose 6.7%, televisions 7.9%, sporting goods 8.4% and furniture 11.8%.
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Christmas shopping disparity
Vacation expenses are expected to average $ 1,463 per household, up 5% from 2020, according to a Deloitte consumer survey released in October.
But the consultancy predicts huge discrepancies in spending between income groups, driven in part by inflation.
While consumers with an annual income greater than $ 100,000 will increase their vacation expenses by 15% from last year, vacation expenses will increase only 3% among buyers who earn between $ 50,000 and $ 99,000 year.
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And for consumers making less than $ 50,000, spending will drop 22% over the holiday period this year.
"There is a history of two vacation seasons, in which higher-income households plan to spend five times more than lower-income households," Deloitte said.
"Most of this season's earnings will be driven by higher-income buyers."
Many low-income shoppers will be left out of the holiday season entirely, according to Deloitte.
Some retail chains have recently said that lower-income customers have felt the impact of inflation and reduced discretionary spending.
"Inflation in food, fuel, services and other necessities creates financial pressure on our lower-income customer base," said John Swygert, CEO of Ollie's Bargain Outlet, in a call with analysts this month.
"We're [seeing] these customers buying less often simply because they have less disposable income."
Walmart noted that it is actively trying to keep gas prices low to attract customers concerned about how much they are paying at the pump, especially as federal stimulus benefits wane.
"Gas prices are a concern ... They have risen dramatically compared to a year ago," Walmart CEO Doug McMillon said in a call with analysts last month.
"Customers had money [then]. And at some point, that will come to an end."
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For Erin Leonards, who lives in southwest Louisiana, "gas prices are what kill me."
Now he spends $ 50 to fill his tank these days.
"It used to cost $ 30 at most," he added.
Rising gas prices put pressure on Leonards, who has three young children, ages two, four and six.
She is in beauty school and works part-time at a fried chicken restaurant, earning less than $ 50,000 a year.
Leonards said he bought 18 to 20 gifts last Christmas for each of his children and also bought gifts for his three godchildren, as well as his nephews.
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This Christmas, she bought just four gifts for each of her three children, telling them to choose "something they want, something they need, something to wear and something to read."
Leonards claimed that her children understood when she explained that "Santa wanted to try something new this year" with gifts.
But she still felt guilty that she couldn't give them as much as last year.
Rising inflation in essentials, combined with a pullback in federal stimulus, will also make it harder for budget-conscious consumers to buy discretionary goods in 2022, Goldman Sachs retail analysts said in a research report this week.
This can affect both retailers that cater to low-income shoppers and the broader American economy.
Next year, "consumer focus will likely shift to [finding] value in key essentials while discretionary spending will decline," analysts said.
Lower-income buyers are likely to "remain under significant pressure."
CNN Business's Julia Horowitz contributed to this article.