UK retailers are beginning to see the first signs of a Christmas shopping rush, as consumers signal stronger spending intentions heading into the festive season.
New data from the British Retail Consortium (BRC) and Opinium show that shoppers plan to spend more on retail goods over the next three months, even as confidence in their personal finances continues to weaken.
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Spending sentiment improves as festive season nears
According to the BRC-Opinium Consumer Sentiment Survey, expectations for personal spending on retail rose sharply to +14 in October, up from +5 in September.
Overall personal spending intentions climbed to +18, compared with +14 a month earlier. At the same time, consumers’ outlook on the broader economy showed a small improvement, rising to –35 in October from –36.
Helen Dickinson, Chief Executive of the BRC, said that with Christmas “around the corner,” spending expectations had risen strongly, particularly among households with children.
“Expectations of spending, particularly on retail goods, rose sharply, with a corresponding drop in expected savings,” she said.
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By GlobalDataThe data suggest that Millennials and Gen X consumers—those most likely to have dependents at home—are leading the early wave of festive shopping activity.
Financial pressures weigh on household confidence
Despite growing enthusiasm for Christmas shopping, the report indicates that consumers are feeling less confident about their financial situation.
The index measuring personal finances fell to –11 in October, from –7 in September, marking the lowest reading since May. Meanwhile, expected savings dropped to –9, from 0 the previous month.
Dickinson noted that the dip in financial sentiment reflects ongoing worries about the cost of Christmas and potential tax increases in the upcoming Budget.
“Worries about the cost of Christmas, coupled with concerns about potential tax rises, are likely to have contributed to the fall in sentiment around personal finances,” she said.
Inflation and cost pressures shape outlook for retailers
The prospect of increased festive spending comes against a backdrop of continued inflation and high operating costs for retailers. The BRC said that while Christmas may boost grocery and gift spending, many families remain cautious due to higher food prices and energy bills.
“While the prospect of Christmas may have boosted expectations of grocery spending, the general rise in food prices has meant many families are struggling with the rising cost of living,” Dickinson explained.
She added that retailers are working to contain price increases, but elevated costs from the last Budget—such as higher employment and packaging taxes—are still filtering through supply chains.
The industry body also urged the government to use the upcoming Budget to relieve pressure on the sector, calling the “disproportionate burden of business rates” a continuing challenge for high street and online retailers alike.
As the festive season gathers momentum, retailers will be watching closely to see whether consumers follow through on their spending intentions.
The final quarter of the year—the so-called “golden quarter” for retail—will reveal whether optimism translates into real sales amid one of the most uncertain economic climates in recent years.
