UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'Paying for price increases'
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Nov 28, 2025 US consumers are splurging during Black Friday, tapping into savings for nonessentials. Retailers balance discounts with rising costs, trying to maintain profit margins amid price increases. Noteworthy hikes in household goods like bananas and beefsteak are highlighted. Meanwhile, consumers are funding inflation by eating into their savings. In Europe, inflation remains stable despite government controls, while shifts in US immigration policy may impact long-term growth and productivity.
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Discounts May Not Undo Inflation
- US Black Friday spending relies on consumers cutting savings to afford higher prices.
- Retail discounts will be muted because retailers aim to pass on cost increases or hide margin gains under tariff claims.
Wages Have Supported Spending
- Wage increases since April funded nearly all of the rise in real US spending.
- Consumers have financed price rises by reducing their savings rate to maintain spending.
Sharp Food And Goods Price Jumps
- Specific consumer goods saw sharp price jumps over six months, e.g., bananas and audio equipment.
- These rises have pressured households to dip into savings to cover higher everyday costs.