Half of shoppers put limits on Christmas gift spending

HALF of shoppers are putting spending limits on Christmas presents and many are agreeing “no-gift pacts” to save money as the cost of living soars.

With inflation hitting a 41-year high in October, families are being forced to scale back Christmas spending on gifts as the cost of essentials such as fuel and food surges, according to a survey of 1,000 consumers by Retail Economics and money-saving app Hyperjar.

The number of people cutting back is significantly higher among low-income households, with nine in 10 of the least affluent shoppers setting limits compared with two thirds (68pc) of the most affluent. Of all the shoppers surveyed, 51pc said they had put limits on gift spending for children, while 50pc said they had done so for partners.

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

The steep rise in living costs has sent lower and middle-income households’ discretionary income plunging this year, by 14pc and 7pc, according to the data. However, it showed higher income households’ discretionary income rose slightly. Nearly two thirds of the least affluent households and about half of the most affluent ones had gone as far as entering into “no-gift pacts” with others.

These arrangements were found to be most common between friends and siblings, with both at 24pc, while only 1.5pc of shoppers had entered no-gift agreements with their children.

However, Mr Lim said: “Although

consumers will prioritise traditional Christmas categories like toys, over half are expected to set spending limits on children and partners where they would usually indulge more.”

Shoppers have already been spending more in discount supermarkets in the lead up to the festive season as grocery price inflation hit 14.7pc – adding a potential extra £682 to annual grocery bills, according to Kantar.

Data for the 12 weeks to Oct 30 show shoppers’ spending at Aldi and Lidl was up 23pc and 22pc, respectively, compared with the same period in 2021.