Holiday shopping is far from full swing, but spending shifts are already surfacing, according to the Mastercard Economics Institute’s annual holiday forecast for the U.S. and Canada.  

Online sales growth will continue to outpace in-store shopping — e-commerce could grow 7.9% year over year, as compared with 2.3% for brick-and-mortar sales in the U.S., with similar growth in Canada: 5.3% growth online versus 2.5% in store.

But inflation is expected to be a larger contributor to sales growth, as opposed to actual sales volume compared to last year, and the impact of tariffs on consumer prices is not yet clear. Some retailers betting on sales volume may choose to eat the tariff increases, but there are signs that others will be passing them along.

Overall, MEI is forecasting a 3.6% year-over-year increase in total U.S. retail sales, excluding automobiles, from November 1 to December 24, 2025, based on SpendingPulse data, which includes all payment types. In Canada, it’s 2.8% year-over-year growth. Here are some other key takeaways this holiday season.  

When prices rise, shoppers may turn to gift cards, allowing them to navigate rising prices while allowing their loved ones to choose what they want. MEI is anticipating a higher-than-normal use of gift cards this season.

But because gift card purchases are highly seasonal — MEI’s data shows that nearly a third of this spending happens in December and January, on average — the economic impact will spill into 2026. And some categories show even more seasonality: About 38% of all gift card spending at toy stores happens during December and January, with bookstores and health, beauty, and medical supply stores seeing 37% and 36% of their gift card spending during those months, respectively. (Health, beauty and medical supply stores are one category — let’s presume people are picking up cologne, not catheters.)

From fitness trackers to gym equipment with built-in health monitoring to workout mirrors offering personalized training via AI, tech-powered health and wellness is a hot category. Spending on new fitness brands grew at 30% year over year from 2023 to 2024, as compared with 5% for conventional fitness clubs in the U.S., and holiday season spending on these brands has been rising. MEI’s analysis shows that, between 2018 and 2024, spending on new fitness brands during the holiday period has risen 4.5 percentage points compared to the rest of the year.  

The analysis of Canadian holiday baskets showed that shoppers there are prioritizing experiences over physical goods, partly due to rising inflation, which makes physical products more expensive. Travel, dining and leisure activities can offer greater emotional value and personal fulfillment, and industries in the service sector stand to benefit from this shift. If this pattern continues, traditional retailers may need to adapt by offering more value-driven products or bundling goods with experiential elements to stay competitive in a changing marketplace.

Social media continues to shape spending, particularly among Gen Z, who seek out recommendations from influencers they find authentic and relatable. Examining aggregated and anonymized Mastercard data for viral teen and tween fashion brands, MEI found that spending rose 25% year over year in the U.S. over the past six months, as compared with roughly 5% for overall apparel spending, a trend that will likely grow stronger during the holiday season. A deeper dive into the data revealed that, of the 15 American counties where social media drove the most fashion spending, 10 of them were in big college towns, with Ohio University and Indiana University leading the list.