Is this right?

My husbands uncle has been married for about 12 years now. His wife has always wanted a baby ever since but he just didn't think it was time. She even threatened for a divorced because it was that serious. Finally this year they had a beautiful baby girl, as happy and as healthy as can be. I myself also have a baby girl (6 months old). They came over for the holiday break and I noticed that their daughters clothes did not fit her. They were wayyyy too big. Their baby girl is a little on the small side so I just thought that maybe it was because of that. Then I ask what size clothes does she wear and her mother said that she buys her size 9-12 months clothes. I was shocked. I said why on earth is a 1 month old wearing clothes so big on her that she can sufficate because there's too much fabric. She straight up said that she was not going to keep buy clothes for her because it was way too expensive and she was only going to wear them for about 2 months. She would rather buy 9 months clothes that way it would later her a whole year. I was very disappointed by how cheap she was about buying clothes. Her husband works and makes a decent pay. They go out often which means they aren't afraid to spend. And considering this was only going to be their baby I thought she would spoil her and buy her decent clothes that actually fit her because I felt so bad that her outfit wasn't even her size. :( I told her I will give u my daughters clothes because she's obviously bigger now and I baught her Newborn up till 6 months now, and she was so happy she was like " Oh yes please give me all the clothes you got, I will save so much money and I don't have to buy anything" this was very sad to me. Plus she even asked if I had hats for her daughter because she didn't buy any and hats aren't that expensive you can buy a whole pack from Amazon for like $3-$5. So my question is, is this right?? Am I overreacting or is this normal that parents do this? I understand buying over fitting clothing by just a size or two but I thought it was dangerous for her baby since there was too much fabric and she wasn't snuggled enough because the clothing was too loose.