The latest analysis by RIFT Tax Refunds has shown that the cost of living crisis is expected to dampen the Christmas spirit to the tune of £2bn, with retail sales forecast to fall by 2.3% versus 2021. As a result of the cost of living crisis, it is expected that total retail sales will dip by 2.3% in 2022, with the economy seeing a reduced spend of £2bn.
“The average household spent just over £3,000 within the retail sector last Christmas and this increased spend brought a very welcome boost to a sector that had suffered greatly during the pandemic,” commented RIFT Tax Refunds ceo Bradley Post. “Unfortunately, this return to health looks to be short lived, with the cost of living crisis expected to dampen consumer sentiment considerably this year.”
Added Bradley: “The only silver lining is that, while we expect to see the nation tighten their belts this Christmas, the total contribution to the economy via the retail sector will sit above the pandemic low seen in 2020.”
The research shows that an estimated £82.2bn is forecast to be spent this Christmas, down not only on the five year peak seen in 2021, but also the pre-pandemic spend seen in 2019.
While London and the South East are expected to see the highest total retail spends this Christmas at £14.8bn and £12.8bn respectively, they are also two of the top three regions expected to suffer from the greatest decline in consumer sentiment. Total Christmas spend is expected to fall by 4.4% in the South East and 4.3% in London when compared to 2021, with only the North West seeing a greater decline at 5.2%.
In the North East, retail sales are expected to dip by 3.6%, with the East Midlands (2.3%) and East of England (2.2%) also expected to see a reduction of more than 2% in total Christmas spend.
While some restrictions remained in place last year, a greater sense of festive normality returned with consumer sentiment soaring and total retail sales hitting £84.2bn, a 5.6% year on year increase and the highest Christmas spend in five years.
Top: According to analysts, the Christmas retail spend is forecast to drop by £2bn this year.
