FREEHOLD TOWNSHIP - It's been an expensive year.

Iyani Cusmai opened Iyani Lash and Beauty Studio in Matawan. She had to pay a premium to buy a car. And grocery bills are sky high. So with the holidays approaching, her family decided to keep a lid on their spending.

"Everything went up price-wise, so we collectively as a family just decided to do away with a lot of the individual, person-by-person shopping," said Cusmai, 27, of East Windsor. "And we can just have a party, that's it."

Squeezed by high inflation this year, many New Jersey shoppers say they are making concessions this holiday season. As they see it, they have three options: spend less on gifts; spend the same, but buy fewer gifts; or put it on a credit card as a delaying tactic.

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They are running into the dilemma despite signs that inflation is starting to ease; the Federal Reserve Board on Wednesday continued its campaign to increase interest rates to reduce demand, and retailers say they have plenty of inventory. But for middle- and lower-income consumers in particular, the relief hasn't come fast enough.

“It's certainly been a challenge for people, but they seem to be adjusting and making sacrifices to keep the holiday spirit alive," said Alyssa Maurice, research associate at the William J. Hughes Center for Public Policy at Stockton University in Galloway.

The center released a poll taken in October and November and found two-thirds of New Jerseyans said inflation was having at least somewhat of an impact on their holiday shopping. And the 30-to-49 age group — those most likely to have young children waiting on holiday gifts — was the one most challenged by the economy.

'It's all going on credit'

Freehold Raceway Mall looked busy for a Tuesday afternoon this week, with shoppers toting bags, Christmas carols playing overhead, stores advertising discounts in their windows and Santa Claus settling into his customary seat on level one next to the Zara store.

Inflation, however, wasn't far from consumers' minds. Elisa Lino, a single mother in her 40s, who lives on a farm in Millstone with her two children, said the cost of bare necessities left her with little disposable income; she's had to delay repairs to her home because construction material is expensive.

But Lino said she was shopping anyway, noting she didn't want her children, who are 12 and 16, to miss out.

"It's all going on credit," Lino said.

Prices have been climbing in 2022 at their fastest rate in 40 years, forcing consumers to dig deeper to pay for everything from food to cars and prompting the Federal Reserve Bank to hike interest rates in a bid to slow down the economy.

The Fed on Wednesday continued its campaign. It increased the federal funds rate — the rate banks charge each other for overnight loans — by half a percentage point, which will increase borrowing costs on short-term loans like credit cards.

It marked the seventh rate hike of the year.

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There are signs its strategy is taking hold. The Consumer Price Index — the chief measure of inflation — rose in November at an annual rate of 7.1% nationwide and 5.9% in the New York and Northern New Jersey region, down from its peak of 9% in the U.S. and 7.6% in the Northeast in June, according to the U.S. Bureau of Labor Statistics.

More relief could be on the way. New Jersey gas prices, which had an outsized impact both on the CPI in November and consumer psychology, fell from an average of $3.91 a gallon a month ago to $3.37 a gallon Wednesday, down nearly 14%, according to AAA.

But the outlook isn't clear. With New Jersey's unemployment rate at 3.5%, workers continue to be in heavy demand, potentially giving them more power to demand higher pay.

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'Sort of getting back to normal'

Toms River-based OceanFirst Financial Corp., the biggest bank based at the Shore, plans to increase its minimum wage from $17 an hour to $20 a hour beginning Jan. 1 and hand out raises next year of as much as 7%.

"I don't think we're going to see a direct line here where you see inflation just kind of steadily go down," said Chris Maher, OceanFirst's chairman, president and chief executive officer. "But I think we're going to have the situation firmly under control in the second half of next year."

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Retailers purchased their inventory for the holiday season as much as a year ago. But they, too, are seeing signs of price relief. Cargo container prices, while not at their pre-pandemic levels, have declined sharply. And stores are stocked with so much inventory that some retailers have already marked down prices.

L.L. Bean, a Freeport, Maine-based retailer with stores in Freehold Township, Paramus and Marlton, saw sales take a surprise dip in November, before picking up beyond expectations after Thanksgiving, Stephen Smith, president and chief executive officer, told USA TODAY Network New Jersey.

The late fall slowdown was "disorienting because the year has been moving along well," Smith said. "Then, once Thanksgiving hit and the weather got cold, sales have been right on plan. So we lost a little momentum, but now we're right back at it."

Elsewhere, shop owners say the supply chain backups are easing.

"The supply chain issue is sort of getting back to normal," said Peter Albertelli, owner if BookTowne, a Manasquan book store that saw a spike in sales during COVID and now is seeing a return to more normal buying patterns.

Consumers seem to be adapting.

Iyani Cusmai said she sees the slowing economy play out in her beauty studio, where her regulars have cut back and now come in only for special occasions. So she and her family got together and decided they didn't need to get presents for everyone this year.

"At first, it sounded disappointing," Cusmai said. "But honestly, it takes a lot of pressure off the holidays and we can just enjoy the family."

Michael L. Diamond is a business reporter who has been writing about the New Jersey economy and health care industry for more than 20 years. He can be reached at mdiamond@gannettnj.com.

This article originally appeared on Asbury Park Press: Inflation bites NJ holiday shopper spending