Half of shoppers are cutting back on Christmas gift spending as the cost of living soars

The data showed that half of shoppers are limiting the amount they spend on Christmas presents, with many making arrangements with friends and family to skip gifts altogether. as the cost of living is skyrocketing.

With inflation hitting a 41-year high in October, families are being forced to cut their spending on Christmas gifts as the cost of basic necessities such as fuel and foodsaid a survey of 1,000 consumers by Retail Economics and the Hyperjar app.

The the number of people cutting back is significantly higher among low-income households, with nine in 10 of the least affluent shoppers placing restrictions compared to two-thirds (68 percent) of the most affluent.

Of all shoppers surveyed, 51 percent said they limited their spending on gifts for children, while 50 percent said they did so for their partners.

Richard Lim, chief executive of Retail Economics, said: “This will be a Christmas like no other. Against painful levels of inflation, consumers will tread a careful tightrope between celebrating and budgeting wisely.”

The steep rise in the cost of living has caused the discretionary income of lower- and middle-income households to fall by 14 percent and 7 percent, respectively, this year, according to the data. However, it showed that the discretionary income of higher-income households increased by 1 percent.

Two-thirds (63.2 percent) of the least affluent households and half (52 percent) of the most affluent went so far as to make “no-gift pacts” with others.

These deals were found to be most common among friends (24 percent) and siblings (24 percent), with only 2 percent of shoppers making no-gift deals with their children.

However, Mr Lim said: “While consumers will prioritize traditional Christmas categories such as toys, more than half are expected to set spending limits on children and partners where they would normally indulge more.”

Other categories of gifts are not supposed to be so good. Only 3 percent of shoppers said they would choose books, music and stationery. Gifts for home use and gardening were considered the most consumable, with only 0.6 percent of survey respondents saying they would give them a preference.

Alcoholic gifts would be preferred by 5 percent of people, while 9 percent said edible gifts would be preferred.

Mr Lim added: “Buyers are also likely to be more prepared as they shift their spending forward to spread costs and be less impulsive.”

Shoppers have already spent more at discount supermarkets ahead of the festive season as food price inflation hit 15 per cent – adding a potential extra £682 to grocery bills, according to Kantar.

Figures for the 12 weeks to 30 October show that customer spending at Aldi and Lidl increased by 23% and 22% respectively compared to the same period in 2021.

Mr Lim said: “Retailers will have to go to great lengths to encourage consumers to choose them over their competitors, focusing on a strong value proposition that will be clearly visible in customer communications.”