AIER Thanksgiving Index Climbs to Record High: Persistent Inflation Challenges Households and Fed Policy

The AIER Thanksgiving Cost Index (TCI) hit a near-record 1912.30 in 2025, up 3% year-to-September compared to the previous peak. This surge reflects persistent inflation in energy, labor, and supply-chain costs. While the overall food basket remains historically expensive, some categories softened: turkey prices fell 0.8% YoY in 2024 due to stable supply and retail discounts according to the report, though turkey and sauces have still risen over 35% cumulatively since 2020. Canned fruits (+6.2%) and frozen vegetables (+1.7%) within the core basket saw renewed inflation.

This index plateau highlights the uneven nature of disinflation. Food-at-home inflation slowed to 2.7% CPI in September 2024, but non-core service costs are accelerating significantly. Expenses like haircuts and pet care have jumped 30-31% since 2020, outpacing broader core CPI trends. These peripheral services, fueled by labor shortages and ongoing pandemic-era economic adjustments, now pose a greater challenge to the Federal Reserve's price stability mandate than the core food basket itself.

For households, the elevated TCI underscores that holiday budget pressures are enduring, not temporary. The cumulative price increases since 2020 for key items like turkey and sauces mean even brief dips don't erase years of financial strain. Simultaneously, the Fed faces a complex environment where traditional CPI measures understate persistent inflation in services, complicating monetary policy decisions amidst potential data gaps during government shutdowns. The disconnect between food basket trends and service-sector heat adds friction to the disinflation process.

Supply-Driven Cost Pressures

Despite seasonal discounts, the core cost structure of the 2024 Thanksgiving meal faced significant upward pressure from supply-side shocks. Avian flu outbreaks slashed turkey supplies, contributing to a 6% drop in turkey prices for this year's meal. While that specific decline slightly reduced the overall dinner cost, it wasn't enough to offset other rising expenses. Crucially, persistent inflation keeps the meal substantially more expensive than pre-pandemic, sitting 19% above 2019 levels.

Tariffs imposed on agricultural inputs and steel proved particularly damaging for canned goods and prepared hams. The cost of cranberry sauce soared by 22.3%, while spiral hams jumped an even steeper 49%. These steep increases stem directly from the added costs passed through the supply chain due to those trade policies. Labor shortages further strained production, pushing up prices for items like stuffing and rolls by 8%. Even with the nominal turkey price drop, energy-intensive processing and logistics costs help maintain these elevated price floors across essential categories.

Households feel this double whammy of weaker supply (turkey) and higher input costs (tariffs, labor). The 2024 meal cost for ten people fell 5% to $58.08, yet remains nearly one-fifth more expensive than in 2019. With 67% of Americans reporting financial stress over holiday costs, these supply-driven pressures continue to strain family budgets well beyond the seasonal discount period.

Household Budget Strain

Despite a brief 5% dip in 2024's average Thanksgiving meal cost to $58.08 for ten people, prices remain stubbornly 19% higher than pre-pandemic 2019 levels. This persistent inflation pressures household budgets, forcing tough choices even as core food costs show temporary relief.

The modest decline stemmed mainly from turkey prices falling 6% due to reduced avian flu impacts and weaker demand, according to agricultural reports. However, this improvement was partially offset by 8% increases in stuffing and rolls driven by ongoing labor shortages. Cranberry prices also rebounded sharply, climbing 11.8% after a steep drop in 2023. These mixed signals explain why the meal still costs $5.80 per person-nearly $20 more than in 2019.

Regional disparities further deepen budgetary stress. The West now pays 16% more for equivalent Thanksgiving meals than the South, creating uneven financial strain across the country. Labor-driven cost pressures appear particularly acute in peripheral expenses: pet care costs have surged 30.9% since 2020, while laundry services rose 28.2%. These ancillary expenses now outpace both core food inflation and broader meals-at-home trends, squeezing household budgets beyond grocery bills.

While retail discounts and stabilized poultry supply provided temporary relief to main course costs, the persistent inflation in side dishes, regional price gaps, and soaring service costs reveal a household budget under sustained pressure. The dip in overall meal prices may offer short-term solace, but affordability challenges endure for families navigating both staple and peripheral expenses.

Fed Policy Constraints and Risk Spine

The Federal Reserve faces mounting headwinds as inflation persists in key service sectors and food categories. The Thanksgiving Cost Index (TCI) for 2025 neared an all-time high of 1912.30, reflecting a 3% increase through September 2025, signaling renewed price pressures after a brief 2023–2024 dip. This TCI report also notes incomplete data due to a government shutdown, complicating the central bank's view of the economy.

Broader food costs have remained stubborn. From October 2022 to 2023, the TCI rose 5.3%, with food-away-from-home expenses increasing similarly. Secondary costs like haircuts and pet care surged faster than overall inflation, straining household budgets. The Fed's pandemic-era policies are cited as a key driver of these trends. According to the analysis, these trends have persisted.

Labor shortages are worsening the situation. In 2024, holiday meal costs jumped 9.8% year-over-year, fueled by avian flu reducing turkey supplies and labor constraints in production. Sharp increases hit cranberry sauce (22.3%), spiral ham (49%), and canned corn (21.1%), with 67% of Americans reporting financial stress over holiday expenses. According to the report, these trends continue to strain household budgets.

Persistent inflation in these categories, especially services, could force the Fed to delay rate cuts if it continues into Q4. However, the incomplete data environment and temporary shocks like avian flu might give the central bank flexibility to wait for clearer signals before acting. Households already face historically high holiday budgets, underscoring how these pressures could outlast short-term relief.