Premium food, clothing and technology purchases are expected to drive a 5% jump in festive spending to £22.7bn this year, according to figures that suggest UK consumers will outstrip the first post-pandemic Christmas in 2021.
The average spending on gifts and celebrations is expected to rise from £416 to £433 for each person, the survey of 2,000 adults by the accountancy firm PwC found.
Consumers are likely to be keener to spend after the easing of the cost of living crisis, which affected household finances during 2022 and 2023 after Russia’s full-scale invasion of Ukraine prompted global energy prices to soar. UK inflation has dropped from 10.5% in December 2022 to 2.3% in October.
The research suggested that spending will exceed the £21.6bn, or £426 for each person, recorded in late 2021, when consumers were able to return to more normal festive socialising, albeit with some restrictions related to the Omicron variant of Covid.
Consumers named food and drink and Christmas dinner as the top spending priorities for 2024, suggesting that they might opt for more premium ranges, PwC said.
Recent figures from Barclaycard indicated households spent less on groceries last month, as they sought ways to save on essentials in order to fund treats such as holidays.
Clothing was the top spending priority for under-25s and third overall, according to PwC, giving hope to retailers that people will buy new outfits after several years of holding back.
Spending on clothing was down in October and early November, but a turn in the weather is thought to have spurred sales of expensive items such as boots. However, Storm Darragh affected trips to the high street last weekend, potentially depressing sales.
Strong spending on technology during the end-of-November Black Friday promotions – a post-Thanksgiving tradition imported by retailers from the US – is expected to continue through December, particularly for 35- to 44-year-olds.
Sales of technology, homewares and seasonal products rose 1.8% in value and 7.7% in volume overall compared with Black Friday 2023, according to figures from the analysts GfK.
Sales of TVs, tablets and smartphones were down but shoppers snapped up tumble dryers as well as beauty technology such as hair styling tools, electric massagers and LED face masks, driven by social media hype.
In a sentiment many people will recognise, PwC said British consumers have a “well-established habit of spending more than they initially plan during the festive season”.
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The proportion of consumers who said they intended to spend less than last year on Christmas fell from 27% in September to 16% last month. PwC said that shift “reflects growing confidence in household finances, bolstered by increased clarity following the October budget” announced by Rachel Reeves.
Lisa Hooker, who leads PwC’s consumer markets work, said she was “cautiously optimistic about the outlook” after consumers showed “caution” during the autumn as they awaited tax increases from the government.
“After volume declines for most non-food categories in 2024, it is good to see a relatively strong end to the year with increased spending over Black Friday, which is expected to continue over the festive period,” she said. “As usual the winning category is food and drink with growth in the premium ranges exceeding value ranges as customers want to selectively treat themselves and their family.”
The coronavirus pandemic also appears to have changed the way that some households spend Christmas: 7% of British households said they planned to go on holiday over the period, up from 5% last year and only 2% before the pandemic.
The survey found that 55% of Christmas present spending will be online for home delivery, with 10% using click and collect and only 36% bought in physical stores. Even shoppers aged over 65, who had traditionally favoured trips to the shops, are now buying almost half their gifts online, PwC found.
