Christmas comes with a hefty price tag. Over the festive period, households typically spend much more than in other months of the year, as people partake in celebrations, buy gifts, and prepare for holiday gatherings. However, following a year of continued economic malaise, Cebr expects consumers to be moderate with their Christmas activity, with real terms spend being down on last year.
The expectation of a weak Christmas period is based on our assessment of the current overall consumer landscape, which remains one of caution. Global and domestic headwinds have contributed to slow consumption growth this year, following two consecutive years of decline. Over this period, consumers have largely opted to build up buffers, as evidenced by the continually elevated savings ratio, both to protect against future shocks and to also benefit from interest returns, with rates currently higher than recent norms.
Though the build-up of savings could feasibly translate into a more indulgent festive spending period, it appears that consumers are not yet prepared to splash the cash. According to the PwC Autumn Consumer Sentiment Survey, 85% of respondents reported continued concerns about the rising cost of living.1 Additionally, when asked about spending intentions for Q4, 73% reported they planned to cut back on spending.[1] Data from the YouGov/Cebr Consumer Confidence Index show that sentiment weakened in November, with continued negativity across perceptions of household finances. So, even if consumers have the means this Christmas, it looks like caution, rather than comfort, will shape festive spending behaviour.
This is ultimately being underpinned by squeezed incomes. Inflation has risen this year and remains far above target. We forecast headline inflation to be 3.4% in December 2025, compared to last year’s rate of 2.5%. Additionally, inflation is currently concentrated in components that are of particular importance to the festive period. Prices for food and non-alcoholic drinks, alcohol & tobacco, and transport are all growing even faster than the already elevated headline rate. All the while, real earnings growth has been weaker in recent months, reaching a two-and-a-half year low on the latest available data.
With these factors in mind, what is the expected impact on festive spending? This year, we estimate that the average household’s Christmas spending will total £541, a £14 increase from 2024. This would mark the first year that nominal Christmas spending has risen above its five-year pre-pandemic average of £537 and the highest figure since 2018.
However, after adjusting for inflation, there is a different picture. In real terms, Christmas spending in 2025 is expected to remain 24.8% below the five-year pre-pandemic average, highlighting a continued shortfall. As a near-term comparison, real Christmas spending is projected to fall this year, by 0.9% relative to last, reversing much of the 2.1% growth that was recorded. The fall in real -terms spending, combined with the rising nominal, means that consumers are getting ‘less bang for their buck’, ultimately paying more for fewer goods.
Figure 1. Average household real and nominal festive spending, 2012 to 2025
Source: Cebr analysis
When we consider the breakdown of festive spending, the largest share of retail spending is concentrated in non-food stores, accounting for 67.4% of the total. This category covers department stores, clothing and footwear shops, household goods stores, and similar, being key outlets for sourcing Christmas gift purchases. In nominal terms, households are expected to spend £364 on non-food stores, an increase from last year. Food spending is expected to increase slightly compared to last year, to £99. The nominal increase is largely driven by higher food prices, as elevated food inflation continues to push up the cost of groceries, rather than consumers purchasing a higher quantity of goods.
Figure 2. Average household festive spending breakdown, 2024 to 2025
Source: Cebr analysis
At a time when the economy is already struggling for momentum, our projections suggest that the 2025 Christmas period will provide little remedy. The effects of a poor Christmas season would also be concentrated in sectors that have already been struggling. Retailers have faced a challenging year due to rising employment costs, continually squeezed margins, and feeble consumer demand, with sectors like hospitality being similarly affected. Any shortfall in Christmas spending would be more likely to extend prevailing pressures than to relieve them.
[1] PwC: Consumer Sentiment Survey Autumn 2025