Inflation: ‘sticker shock’ on holiday shopping expected

As inflation continues to weigh on Canadians’ spending, a retail expert says misleading discounts based on higher regular prices could mislead shoppers this holiday season.

Bruce Winder told CTV News Channel on Sunday that consumers can expect to see « a lot of sticker shock » in retail stores over the next few months.

« You’re going to see a lot of discounts, but a lot of those discounts will be based on higher regular prices year over year due to inflation, » he said.

“My hypothesis is that consumers will start [holiday shopping] early and they will really select the discounted items.

Unlike last year, when retail stores faced supply chain shortages, Winder said retailers have been stocking up on excess inventory for this holiday season.

« [Retailers] had to make calls about a year ago before inflation erupted and the economy [took a] hit. So retailers made these big bets and they all came through,” he said.

Winder added that those retailers will have to drastically reduce that excess inventory to « get it out, » and consumers should shop around if they’re looking for deals.

The latest Consumer Price Index report from Statistics Canada shows that Canada’s annual inflation rate in September fell slightly to 6.9% from 7.0% in August.

This was a smaller decline than economists had expected given the Bank of Canada’s interest rate hike, and although economic projections of a technical recession added to the storm of soured consumer sentiment, some consumers worry that retailers will raise costs to ease financial pressures later.

“Retailers will primarily try to pass on cost increases when they can,” Winder said. “Some can and some can’t. But there are speculations circulating that some retailers are refunding it even more than inflation.

Winder said consumers « won’t really know. »

« The best thing I would say if you’re a consumer is to shop around, » he advised.

“Look for real bargains and don’t just assume it’s a bargain because it’s a discount. Comparison store. Look for retailers that have a lot of stock in store – you’ll notice this and they’ll likely offer bigger discounts. »