Inflation and the economy remain dominant concerns for many consumers this holiday season, prompting them to adjust their spending habits, according to an EY future consumer index survey.

Why it matters: Retailers are struggling to account for this shift, marking down items early to lure in budget-conscious consumers in anticipation of a muted holiday shopping season, Kimberly writes.

What’s happening: Nearly 90% of global consumers in the survey say they either plan to spend less or won't dial up their spending on their families this year.

• Over 40% say they’ll spend less on gifts for friends this year.
• Only 10% say they’ll stick to their spending habits because “traditions are “traditions.”

Yes, but: About a quarter of the respondents say they will continue to spend more on gifts for their children.

• “We will see people going that extra mile spending, trying to do their best to find whatever it is they're looking for” to get gifts for their children, Kristina Rogers, EY’s global consumer leader tells Axios.
• After nearly three years of the pandemic, families want to give their children good feelings this holiday season, Rogers says.

The intrigue: Winter fashion items may feel the brunt of this adjustment, Rogers says.

• “People might just give it a miss and say, this is not an essential item. I have a coat, I have boots from last year,” she says.
• Then there’s the sustainability factor, she adds, because people won’t feel the need to replace their winter jackets every season.

Of note: Global consumers will also scale back on vacation travel, according to the survey.

The big picture: Even with holiday-related purchases, around 45% of consumers say they’ll be more careful about the usefulness of a product.

• Sustainability is a topic that will stay, says Thomas Harms, EY’s global retail leader, as more people show a willingness to pay up for sustainable products.
• “Price is still a hurdle, especially in these times, but it's pretty stable,” he tells Axios.
• Companies will need to pay close attention to this as they look at their assortment and strategies, he says.
• “At the end of the day, they, in the eyes of the consumer, are responsible for it, because they sell the product to them,” he says.

The bottom line: Ultimately, consumers will scale back on discretionary items like TVs and electronics and be “very focused on the essentials,” Rogers says.