Holiday shoppers in Arkansas and across the nation are bracing for higher prices as experts project a significant increase in retail spending this year. The National Retail Federation (NRF) forecasts total holiday spending will surpass $1 trillion, with retail sales expected to grow by 4.2% compared to the previous year.
Dr. Michael Pakko, chief economist for the Arkansas Economic Development Institute, said the projected spending growth must be viewed alongside broader economic trends, including a 3.7% rise in consumer prices over the past year.
“So that really amounts to only about one half of a percent increase in real spending,” Pakko explained.
Several popular holiday gift categories have seen notable price increases, according to Pakko. Jewelry and watches are up 11%, sporting goods have risen 4.7%, and toys are up 6.6%. Apparel prices have also climbed, with boys’ clothing up 8% and girls’ clothing up 3%. Pakko attributed these higher costs to factors such as tariffs, energy prices, and increased transportation expenses.
“Computers and related peripherals are up 6% or more,” Pakko added. “Computer equipment and software are up 9.7%, and video game-related items have jumped 28% from last year.” Even gift-wrapping supplies, Pakko noted, have seen price increases in line with overall inflation.
Consumers like Jonesboro resident Layni Boggs are responding by tightening their budgets. “I’ve asked around work for more hours and looked at coupons, figuring out how I can save money,” Boggs said.
For some shoppers, the challenge has required innovative solutions. Anna Treece, who holds a second job, said she is focusing on more meaningful gifts this year. “For me, it’s really more valuable or thoughtful gifts than it is the quantity of gifts that I’m giving,” she said.
Treece, also a manager at a retail store, encouraged holiday shoppers to look for savings wherever possible. “Sometimes in the stores, it doesn’t hurt to ask if there are any discounts,” she said. “They’re usually out there.” Secondhand shops may also serve as a more affordable option, according to Pakko.
Rising fuel and travel costs are another consideration, Pakko said, adding that higher expenses could lead more people to stay closer to home. Motor fuel is up 35% compared to last year, while airfare has increased by approximately 22.5%.
Despite these hurdles, holiday spending remains on track to reach historic levels. Experts say families are prioritizing thoughtful financial choices while finding ways to maintain cherished traditions.