The Christmas season brings with it a significant increase in expenses, but this year 2925 could be even more extravagant than usual. This is due to inflation and the consequent price increases. Despite this scenario, MasterCard predicts a rise in spending, and Bank of America reported a 5.7% increase in purchases. However, it is worth offsetting this somewhat by knowing that these data do not make sense: as prices rise, the amount of spending increases, but not the number of purchases or the number of items per purchase.
The latest Beige Book, published by the Federal Reserve, explains why the figures show an increase in spending among high-end consumers. According to statements to CNN by Bank of America Institute senior economist Joe Wadford, households with low and high incomes live in completely different worlds and economies.
Expenses during Christmas season
The Christmas season is full of key dates in which, besides sharing and celebrating, one of the main goals is spending. This happens on Thanksgiving, during Black Friday, Cyber Monday, Christmas Eve, and New Year’s, when stores set everything up so that consumers find the best deals, but ultimately make a purchase. This time of year is known for being one of the most expensive, but this year 2025, due to inflation, it could be even more costly than usual.
Despite the general increase in prices, some data indicate that spending during this holiday season is thriving and will continue to be prosperous. According to CNN, after comparing figures with 2024, MasterCard predicts a 3.6% increase in holiday spending. On the other hand, Bank of America data reflect a 5.7% increase between October 2024 and October 2025, which suggests that the economy can be defined as healthy.
How is it possible that inflation produces these figures?
Considering the exponential nature of their price increases, it wouldn’t make sense to think that this year’s average spending is higher than last year’s. The reality is that these high prices generate data showing collectively higher spending, but it doesn’t mean that consumers are buying more items. According to Vicki Hyman, Mastercard’s director of communications, “Holiday shopping is far from in full swing, but spending patterns are already emerging. Inflation is expected to contribute more to sales growth compared to the actual sales volume”.
So, who is spending this money?
This is another important factor to consider. According to the latest Beige Book data published by the Federal Reserve, annual spending among high-end consumers had increased three times more than spending among lower-income workers. The latter only rose by 0.7 percent, well below the annual inflation rate, which stands at 3 percent.
This clearly explains who is driving this spending and why a figure shows a healthy economy when the reality is clearly different. According to statements by Joe Wadford, senior economist at the Bank of America Institute, to CNN, “Low- and high-income households often live in two different worlds and experience two different economies. When your bills go up $300, but your salary only goes up $100, what are you going to do?”.
It is important to carefully analyze the data provided by the media and compare it with the reality we are experiencing in order to form a personal opinion and judgment based on truthful information.