UK shoppers to spend £84.9bn this Christmas as high inflation boosts retail sales

Spending is set to hit £84.9bn over the six weeks leading up to Christmas, as high inflation looks to boost retail sales over the festive period.

According to marketing service VoucherCodes.co.uk’s Shopping for Christmas Report 2023, a 3.3% rise in retail spending is expected in December, with sales increasing £2.7bn from the £82.2bn spent in 2022.

However, whilst sales figures are set to rise, sales volume is forecast to decline by 4.1%, indicating that inflation is the primary driver behind spend, rather than consumers purchasing more items.

As a result, gift spend is forecast to fall 3% to £11.25bn from £11.59bn, and decorations spend is set to fall 19.6% from £0.82bn to £0.66bn.

Food and drink retailers can also expect a boost with sales increasing 5.5% to £7.68bn from £7.27bn last year.

The report shows in-store sales are set to continue to recover from their pandemic low, with almost two-thirds of purchases set to be made in-store this Christmas (64%).

As a result, total offline sales are forecast to reach £54.01bn (+3.5% YoY), whereas online sales figures are more modest at £30.91bn (+3% YoY).

It comes as Tesco revealed that UK shoppers are planning to party at home to save on trips out this Christmas, as the cost-of-living crisis continues to put pressure on celebrations and household budgets.

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VoucherCodes.co.uk senior commercial director, Michael Brandy commented: “After a year of price rises and high inflation rates, it comes as no surprise that consumers are planning on cutting back on their Christmas spending this year, and unfortunately retailers are set to bear the brunt of these cuts.

“Whilst retailers can look forward to a rise in spend, they’ll have to work hard to encourage customers to make purchases over the festive season.

“With limited budgets, consumers will be prioritising value above all else so offering deals, discounts and affordable prices will be vital in encouraging customers to part with their hard-earned cash this Christmas,” he added.

Food store sales volumes rose by 0.2% in September 2023, following a rise of 1.4% in August, according to the latest figures from the Office for National Statistics (ONS).