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Inflation continued to slow in November, according to the Consumer Price Index, as price increases across the economy eased up for the second straight month.
Here’s a look at the headline data for November released by the US Bureau of Labor Statistics on Tuesday:
For the month, inflation rose 0.1%, which is down from 0.4% in October.
Year-over-year, the inflation rate was 7.1%, which is the smallest increase since December 2021. It was down from 7.7% in October after spending months above 8%.
Core inflation, which leaves aside volatile food and energy prices, rose 6% year-over-year, down from 6.3% in October. The monthly increase of 0.2% in this measure was the lowest since September 2021.
The results show a second straight month of cooling prices, and were better than economists expected, CNBC reported.
The increase in prices was driven by rising shelter costs such as rent, even as energy prices continued to fall. Notably, gasoline declined 2% for the month, which was a big change from the 4% increase in October.
Food prices continue to rise, as they were up 0.5% for the month, though there was a slight slowing from the 0.6% increase in October. The food at home index, which includes groceries, rose to 12% for the year as four of the six grocery store categories increased.
In key consumer categories, personal care rose 0.7% for the month, while apparel increased 0.2%. Meanwhile, furniture and bedding fell by 0.8% for the month. Toys, which are a particular focus around the holidays, saw prices drop 1.4% for the month.
A second straight month of cooling inflation will cement the idea that prices are beginning to come down from the 40-year-highs reached in the spring and summer. This report will likely boost talk about whether this bout of inflation has peaked.
While there will be some welcome relief in falling gas prices and in many consumer goods, the inflation rate still remains well above what economists and policymakers want to see. This means consumers will continue to see higher prices in everyday life, especially at the grocery store and when they pay rent. Inflation coming down is likely to free up more discretionary funds, but the fact that inflation isn't falling all at once indicates that loosening process may be gradual.
It also means the Fed is unlikely to relent in its posture of hiking interest rates to bring inflation down. The central bank's goal is to get inflation down to 2%. This report indicates the movement is in the right direction, but it may only be the start of a longer period of easing inflation that will be met with the effects of interest rate hikes that are designed to slow down the economy. How these forces interact is likely to be the question of 2023.
Monthly inflation increases, Nov. 2021-Nov. 2022.
As inflation starts to come down in the present, the consumer outlook on inflation for the near future is also beginning to fall.
According to the latest report from the New York Fed issued Monday, the median inflation expectations of consumers decreased across three time horizons:
- One-year-ahead expectations decreased by 0.7% to 5.2%
- Three-year-ahead expectations decreased by 0.1% to 3%
- Five-year-ahead expectations decreased by 0.1% to 2.3%
Economists watch expectations closely at times of high inflation. If people start to expect higher prices, they are in turn more likely to ask for higher wages, which could lead prices to stay elevated.
When it came to particular categories, the New York Fed survey also found significant declines in expectations for the price of gas (-0.6%) and food (-0.8%). Meanwhile, the expected growth in household income increased 0.2% to 4.5%. This was a new series high, offering a sign that people expect to keep earning.
Both the CPI and the inflation expectations report will be among the new data that the Federal Reserve’s top committee reviews this week as it considers the size of its latest interest rate hike. After four straight hikes of 0.75% that were the highest in two decades, Fed Chair Jerome Powell has said that the committee may consider scaling back the next increase, even as it will continue to raise rates to fight inflation in the months ahead.
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On average, customers spend $59 more than the value of their gift card, Fiserv found.
In retail, sales are often measured in goods, whether they are purchased for ourselves or someone else. There are plenty of strategies that brands and retailers use to increase those sales, whether it is marketing, loyalty programs or how that item is presented.
In most cases, these are two different parts of the equation for retailers: The product that is bought and the strategies that lead to the purchase.
That’s what makes the gift card unique.
It is an item you can buy, with a section in the store all its own. Eventually, it leads to the purchase of other goods, so the gift card is leads to a direct sale. Yet it’s also a means to build a retail brand and create incentives that both introduce customers to a store and keep them coming back.
That’s a key takeaway from the 20th Annual U.S. Prepaid Consumer Insights Study from fintech and payments company Fiserv.
At this point, the gift card feels like a staple of the shopping experience. But it is only about 30 years old. In 1994, Blockbuster Video pioneered the sale of cards for gifted purchases directly as a means to combat fraud in paper gift certificates. Since then, they’ve proven to have a multitude of uses that stretch beyond the holidays.
Starbucks and Amazon gift cards are commonly distributed as prizes at team-building events and as pick-me-ups by friends showing they care. In 2022, 60% of consumers said they received a gift card from an employer, according to the Fiserv report. That was a big increase from 32% in 2019. People appreciate the gesture. The survey found that 85% of employees think that gift cards from an employer make for appropriate incentives.
For people looking to show generosity, gift cards can also be a means to stretch dollars. At a time of high inflation, people are looking for deals with their discretionary purchases. Gift card promotions that offer discounts and bonuses are proving particularly popular, the study found. Two-thirds of consumers said promotions can influence them to purchase more, while more than half of consumers took advantage of such an offer in 2022.
Yet the more difficult consumer environment is also having an impact on overall gift card sales. In 2022, the growth of gift card purchases slowed.
“Overall, 56% of U.S. consumers purchased more gift cards in 2022 compared to 2021,” said Tom Niedbalski, VP of gift solutions at Fiserv. “This was a decline from the 73% of consumers who said they bought more gift cards in 2021 than they did in 2020.”
Inflation and less discretionary income were the driving factors for consumers who said they bought fewer gift cards during 2022, as 35% of consumers said inflation was the reason they were purchasing fewer cards.
It's important for brands and retailers to understand why consumers buy gift cards. But it's just as crucial to understand where they can fit in retail strategy. Beyond sales, gift cards can help drive repeat customers, and extend a brand. These tools are particularly valuable at a time when retailers are focused on profitability in a tougher consumer environment.
Fiserv explained four areas in which gift cards are of particular value for brands.The following is directly quoted from Niedbalski:
Improving cash flow and revenue. Gift cards not only drive in-store and online traffic, there is an associated “lift,” or overspend, when a gift card is converted into a sale. On average, customers spend $59 more than the value of their gift card.
Repeat customers. Retailers use gift cards to foster loyalty and customer engagement, ultimately leading to repeat customers. One way we see this play out is through promotions associated with gift card sales. For example: a consumer who buys a $100 gift card for the holidays will receive a $20 bonus card that can be used after January 1 – creating a pre-holiday sale and post-holiday transaction in the New Year.
Branded currency. A gift card places a merchant’s brand directly into the consumer’s wallet, increasing brand awareness and ensuring the merchant’s brand is with the consumer when they are looking to buy.
Year-round marketing. The gift card has grown beyond the traditional holiday season. From birthdays and graduations to anniversaries and babies, gift cards are becoming the most popular way to recognize milestones – giving retailers opportunities to run additional promotions throughout the year.