The Mastercard Economics Institute (MEI) has released its 2025 U.S. and Canada holiday forecast, and while festive spirits are high, spending will be shaped by inflation, tariffs, and consumers’ drive for smarter, value-based choices. The report, published on September 22, 2025, anticipates total U.S. retail sales (excluding autos) to rise 3.6% year-over-year from November 1 to December 24, while Canadian retail growth is expected at 2.8%. Within that, U.S. online sales are forecast to grow 7.9%, far outpacing brick-and-mortar’s 2.3% growth, underscoring the continued strength of e-commerce.
“Consumers will continue spending with holiday sales of 3.6% yoy. E-commerce will continue to drive the growth as consumers look for deals,” said Michelle Meyer, Chief Economist at MEI. Inflation, Mastercard’s analysts note, will fuel a larger share of the spending increase than raw sales volume itself. Tariffs on goods such as clothing, toys, and décor are adding complexity to pricing, forcing retailers…
to decide whether to absorb costs or pass them on to consumers, creating highly competitive pricing battles across sectors. Shopping Smart: Budgets, Gift Cards, and Flexibility When prices rise, shoppers adapt, and in 2025, that means gift cards are back in fashion.
MEI observes that gift card usage will surge sharply this year as buyers seek ways to maintain generosity without overextending budgets. “Gift cards don’t eliminate inflation, but they can help gift givers be generous while navigating rising prices,” the report explains.
Roughly one-third of all gift card spending happens in December and January, meaning the economic ripple will reach into 2026. Certain retail sectors—such as toy stores and beauty and wellness —see most of their annual gift card activity during these months.
Gift cards also offer retailers deferred revenue and an opportunity to re-engage customers post-holiday, creating loyalty retention beyond the festive period. In the blending of value and vibes, classic gift giving is being replaced with more flexible, choice-driven gifting strategies…
Discussion
0 Comments
No comments yet
Start the conversation
Share your take on this story and help shape the discussion.
Sign in to join the discussion.