UK shoppers to cut Christmas spending

By

Barbara Santamaria

Published
Nov 20, 2017

Retailers are being told to expect a bleak Christmas season, with a new report estimating that shoppers will spend less on Christmas for the first time since 2012.

Data compiled by IHS Markit for Visa has shown that rising inflation and a slowdown in wage growth have left shoppers with less money to spend. This is likely to cause a 0.1% fall in consumer spending during the festive period compared to last year, when spending grew 2.8%.

“While it still looks likely that consumers will be hitting stores and websites in search of bargains this Black Friday and Cyber Monday, we expect spending for the duration of the festive season to be lower in comparison to last year,” said Mark Antipof, chief commercial officer at Visa.

“Looking back, consumers were in a sweet spot in 2016 – low inflation and rising wages meant there was a little extra in household budgets to spend on the festive period.

“2017 has seen a reversal of fortunes – with inflation outpacing wage growth and the recent interest rate rise leaving shoppers with less money in their pockets,” he said.

The UK high street is expected to suffer a 2.1% fall in spending compared to the same period last year. This would be the biggest drop since 2012. Clothing and footwear is also forecast to experience a 0.5% fall in real terms.

“Although overall sales are likely to disappoint, we expect some clear winners to emerge. Online and mobile are set to take a record share of Christmas spending,” added Antipof.

Online spending is expected to increase by 2.8% and account for a record share of this year’s Christmas spending. According to the report, of every £5 spent during November and December, almost £2 will be spent online.