Research shows likely cost of living hit to Christmas spending
KPMG research shows consumer intention to cut back on buying gifts, groceries and socialising.
KPMG research shows consumer intention to cut back on buying gifts, groceries.
- One third of consumers say they will be eating & drinking out less this festive period.
- One third of consumers say they will spend less on Christmas groceries.
- Four in ten consumers say they will spend less on gifts this Christmas
- Spending cuts most likely amongst those aged 35-44.
The scale of Christmas spending cutbacks due to the cost of living is highlighted in new research from KPMG UK – which shows consumer intention to cut back on buying gifts, groceries and socialising.
Over 2600 UK consumers were surveyed for KPMG – with the largest percentage (45%) saying that their gift buying budget would be the same as last Christmas. But nearly four in ten (39%) of those polled said that the cost of living meant that they would have a smaller budget to buy gifts this year.
Those saying they will have to cut back their gift budget were most commonly aged 35-44. People aged 65 and over were least likely to say that they had to reduce their gift buying budget. Only 4% of all the consumers surveyed said they would have more to spend on gifts this Christmas.
Spending plans for festive groceries also told a similar story – with the largest amount of consumers (53%) saying their spend will remain the same as last year. But a third (34%) said they will spend less this Christmas. Only 7% said they would spend more.
A third of consumers (35%) also said that they will be eating and drinking out less this Christmas – broadly the same amount as those who said they will do the same as last year (36%). Only 3% said they would be eating and drinking out more.
Consumers saying they will be cutting back on groceries, and eating and drinking out, were most commonly aged 35 to 44.
Responding to the findings, Linda Ellett, UK Head of Consumer Markets, Retail and Leisure for KPMG, said:
“Unsurprisingly, the higher cost of living looks set to take its toll on Christmas spending for many households. Four in ten consumers told us that their gift buying budget will fall this year, whilst a third said they will spend less on festive groceries and do less eating and drinking out.
“The largest percentages of people said that their spending will remain the same this year, but only small amounts of households said that they were in the position to spend more this Christmas. Even for those spending the same – the volumes that they receive may well be less due to inflation.
“The upshot of this for retailers is continued competition for shrinking consumer spend and reduced volume and a need to capture audiences via strong campaigns, well targeted promotions and discounting and great customer experience. Older consumers told us that they were least likely to have to cut their gift buying budgets – so focus on that group and the presents for kids and grandchildren may be key. Retailers will of course also know that getting people of all ages spending early on Christmas gifts can often mean they end up spending more overall due to the likes of late impulse purchases.”
KPMG’s Consumer Pulse research (released at the end of September) showed that 39% of consumers say they are buying more promotional or discount items in 2023. And a third of consumers (29%) said that they have switched to shopping at less expensive retailers.
Consumer Pulse survey questions posed to UK consumers across age and income groups and UK regions, between September 1 to 12 2023, by One Poll, for KPMG UK:
2625 consumers were asked: thinking ahead to Christmas, will the current cost of living mean you that you have a larger budget or a smaller budget for gift buying this year compared to last?
- 4% - Larger budget than last Christmas.
- 45% - Same budget as last Christmas.
- 39% - Smaller budget than last Christmas.
- 11% - Not sure.
- 1% - N/A – did not buy Christmas gifts last year.
2887 consumers were asked: thinking ahead to Christmas, will you be spending more or less on festive food and drink groceries compared to last year?
- 7% - More, compared to last Christmas.
- 53% - Same as last Christmas.
- 34% - Less, compared to last Christmas.
- 5% - N/A – didn’t buy festive food and drink groceries last year.
2887 consumers were asked: thinking ahead to Christmas, will you be eating/drinking out more or less compared to last year?
- 3% - More, compared to last Christmas.
- 36% - Same as last Christmas.
- 35% - Less, compared to last Christmas.
- 11% - Not sure.
- 14% - N/A – did not eat/drink out last Christmas.
Steven Reilly-Hii, Media Relations Manager, KPMG LLP,
T: 07510 376635.
About KPMG UK:
KPMG LLP, a UK limited liability partnership, operates from 20 offices across the UK with approximately 17,000 partners and staff. The UK firm recorded a revenue of £2.72 billion in the year ended 30 September 2022.
KPMG is a global organization of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 143 countries and territories with more than 265,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.