What do we spend?
A typical household in the UK spends about £2,460 in a month.
But, in the run-up to festivals such as Christmas and Hanukkah, our habits change. Households spend on average about £713 more in December, which is 29% more than in a typical month.
What do we spend it on?
As you can see from the chart, our spending on items that might normally make up a small amount of our shopping increases in December:
Spending on video and music equipment and books grows the most – book, newspaper and periodicals sales more than double. Drink and specialist food sales also increase, going up by about 38% and 22%, respectively.
Conversely, our spending on hardware such as paints and glass goes down by 19% as we delay decorating and other major works until the new year.
How has our spending during this period changed?
The most popular Christmas presents from over the years are now seen as relics of their time: Rubik’s Cubes, BMX bikes and Tamagotchis.
Others seem to be timeless. When the original Star Wars film was released more than 30 years ago, a toy Millennium Falcon cost around £20. Fast forward to The Rise of Skywalker in 2019 and it was still in the bestseller lists at about £100.
The way we buy things is also changing. The value of online shopping has more than doubled over the last ten years. In 2023, online purchases accounted for 28% of our overall spend in December.
And promotional events such as Black Friday and Cyber Monday encourage us to spend more in November too, particularly as many shops have moved from one-day to week-long offers to tempt us to buy our gifts earlier.
Why is the Bank of England interested in what we spend?
We regularly look at measures of household spending.
Along with other things such as spending by businesses and the amount of goods we buy and sell abroad, this helps us form a judgement about the overall strength of the economy. Household spending is particularly important as it forms most of the total spending in the economy.
But we need to be careful. Just because people spend more at Christmas does not necessarily mean the economy is strong.
To help us, the Office for National Statistics publishes measures of spending that are adjusted to take away the impact of seasonal events. This helps us capture the true strength of spending across the economy.
The festive period in 2018 was a good example of this. Even though consumer spending rose by nearly 9% between November and December, on a seasonally adjusted basis it actually fell.
It is these seasonally adjusted figures that you will normally see quoted in the news for economic data such as consumer spending, output or inflation.
Using this information on the economy, we set interest rates – normally eight times a year – to help to ensure that price rises are low and stable. By meeting the Government’s 2% inflation target, we help support a stable and healthy economy.
