Mastercard: Gift cards gain ground as tariffs hit holiday budgets

Driving the news: In its holiday spending forecast released Thursday, Mastercard projected sales growth — but warned that tariffs and inflation could reshape shopping lists, boost gift card sales and sharpen the divide between higher- and lower-income households.

By the numbers: Holiday retail sales, excluding autos, are projected to grow 3.6% year over year from Nov. 1 to Dec. 24, Mastercard said in its forecast. That would be down slightly from 2024's 3.8% growth.

• Online sales are expected to increase 7.9%, with in-store purchases rising 2.3%.

What they're saying: "A distinguishing factor in this holiday season will be the role of prices," Mastercard chief economist Michelle Meyer told Axios, noting tariffs are "increasingly playing a role in how retailers are pricing and how consumers are managing."

• "Gift givers are going to hunt for value, and a good way to find that is to embrace gift cards because it allows that fixed cost," she said.

Of note: Forecasts define the holiday shopping season as Nov. 1 through Christmas Eve, but some consumers are already starting to make holiday purchases as retailers roll out early merchandise.

What's next: Expect holiday sales to start in early October. Best Buy, Target, Amazon and Kohl's shared details about early sales this week.

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