Consumers will be facing price hikes of up to 15 percent on holiday goods, from toys to European luxury handbags. Many retailers had resisted passing along higher prices to consumers, but escalating costs — fueled by rising energy prices, higher labor costs in China and a weak dollar — are forcing stores, from warehouse clubs to high-end merchants, to pass more of the burden to shoppers.
The price increases could make shoppers buy fewer holiday gifts to keep to a budget. That could mean a serious hit for the economy, since consumer spending accounts for two-thirds of all economic activity and for the holiday period, which accounts for about 40 percent of merchants’ profits and 50 percent of sales.
Some price increases may not be felt as much as others. A 10 percent increase on toys, for example, may not feel as tough since toys are still cheap. The average selling price for toys last year was $7.45, according to market researcher NPD Group Inc. But those wanting to splurge on an Italian suit, priced at $1,700 last holiday season, will probably have to fork out an extra $170 this year.
