NEW YORK — Christmas in July? That might not be a bad idea this year.
Retailers are talking already about price increases up to 15 percent this year on holiday goods, from staples such as tree ornaments and toys to luxury gifts such as European handbags and clothing. The main cause: soaring energy prices.
Although most consumers are just starting to think about back-to-school shopping, retailers are preparing for the critical holiday season.
Consumers have been seeing prices creep up for many products, but now escalating cost pressures, which also are being fueled by the weaker dollar and higher labor costs in China, are forcing merchants from low-price warehouse clubs to upscale clothiers to pass on more of the burden in the months ahead.
Many stores are still deciding on their holiday prices, and receding oil prices in recent weeks could provide a bit of relief. Buying that status handbag now might help shoppers save a little, but for some items it's already too late.
And any big surge in demand could lead to more bad news on the inflation front, serving as a catalyst for prices to spiral.
With bigger price increases, the nation's merchants risk turning off shoppers who may end up buying fewer holiday gifts to keep to their budgets. That could mean a serious hit for the economy, since consumer spending accounts for more than two-thirds of U.S. economic activity, and the holiday period accounts for a huge chunk of merchants' sales and profits.
"Truthfully, I probably won't purchase items that go up that much, especially something like Christmas decorations," said Marilyn Reese of Cincinnati, who works at an insurance company. "I will just go with what I have."
Carl Steidtmann, chief economist at Deloitte Research, said price inflation will be "another factor that undermines consumer purchasing power and will hurt spending even more. This will be a very difficult holiday season."
The price increases come as stores also have to push even deeper discounts this holiday season to attract customers. But that 50 percent off may not be as good a deal as last year, because the original price could be higher.
Even Costco Wholesale Corp., which had been one of the bright spots in retailing, warned last week that its profit is getting squeezed by rising energy costs, and it will have to raise prices more. Richard Galanti, Costco's chief financial officer, cited holiday decor and rotisserie chickens, which are popular for holiday meals.
Holiday decor will be as much as 12 percent pricier this holiday season than last year, and the price of rotisserie chicken, which was $4.99 for years, was raised to $5.49 about three months ago, and went up to $5.99 last week.
Toy prices are likely to be about 10 percent higher than last year, said Sean McGowan, an analyst at Needham and Co.
K-B Toys Inc., which focuses on selling past toy hits at discounted prices, said it isn't increasing prices for now. The chain even unveiled a program Monday that offers temporary price cuts on some reduced-price toys.
But the discounts are a result of logistical maneuvering. Advertising director Geoffrey Webb said the chain has started consolidating trips from warehouses to stores to save fuel costs.
Kathleen Waugh, a spokeswoman for Toys "R" Us Inc., said prices for some products will stay steady while others will have "gradual" increases beginning in early fall. Waugh declined to comment further because pricing is still being worked out.
At Kidstop Toys and Books in Scottsdale, Ariz., which offers mostly European brands such as Haba and Corolle, 10 percent price increase have begun, said owner Kate Tanner.
European luxury goods are getting even pricier as the dollar falls against the euro. New York-based luxury consultant Robert Burke estimated that the price tag on European status handbags, shoes and clothing will rise as much as 15 percent starting this fall.
"No one expected the weak dollar to last this long or get weaker," said Burke.
Sandy Neiman, director of marketing for clothier Paul Stuart Inc., which sells tailored men's suits for $1,700 to $5,000, expects up to a 10 percent increase on European clothing starting in September.
While he thinks his wealthiest clientele won't "blink an eye," others may switch to less expensive labels or shift their purchases away from items such as knit shirts and more toward suits, which can be worn for several seasons.
Prices for mass-market apparel, which have fallen for decades because of oversupply and cheap labor overseas, are also seeing prices rise a bit because of higher wages in China. That's forcing stores to shift production to other low-cost countries such as Vietnam.
Customers shouldn't expect to see relief after the holiday season either.
Costco's Galanti said prices for patio furniture for next spring will rise as much as 15 percent.