Shoppers indulge in little luxuries

— -- Here's a scary thought: Income is down and fears of a new recession are up — yet, more folks are buying their pets Halloween costumes.

They're also picking up $25 blue Chanel nail polish and $45 Justin Bieber-branded fragrance.

"We call them pragmatic luxuries. You indulge in things that matter to you," says Karen Grant, senior global industry analyst at the NPD Group, a market research company.

Faced with economic stress, many are buying items that add fun to their world, she says. "They are finding little ways to sweeten life in the midst of all the madness."

Nearly seven in 10 consumers who splurge on specialty items — such as lobster macaroni and cheese or liquor-infused jam — do so "to treat themselves," says a National Association for the Specialty Food Trade (NASFT) report out Monday.

"It's not that (consumers) have lost a sense of reality," Grant says. Most know that times are tough, so instead of buying five cheap, throw-away items, they'll buy a $25 treat, she says. Among the splurges:

•Halloween gear. Nearly 15% of revelers will dress a pet — up 43% from 2010, according to the National Retail Federation. Total spending should reach $6.9 billion, up 18% from last year.

•Gourmet goodies. Sales of specialty foods and beverages rose 7.7% to $70 billion in 2010, according to the NASFT. Transatlantic Foods' sales of Aux Délices des Bois brand truffle butter to grocers grew about 23% in the last year, co-owner Thierry Farges says. A pound of truffles may cost thousands, while truffle butter retails for $8 to $10 for 3 ounces, he says.

•Nail care. Products had $14.2 million in department store sales from January through August, up 61% from 2010. Nail salon sales have risen, as well, market researcher IBIS World says. Says IBIS analyst Caitlin Moldvay: "Spending on a manicure they can get for a fairly low price is one way to indulge without breaking the bank."