Customers will cut back on their Christmas spending due to the high cost of living, according to research from KPMG.

A study by the consulting firm, which surveyed over 2,600 UK consumers, found that around 39 per cent of respondents will have a smaller budget to buy gifts this year. Only four per cent of those surveyed said they would spend more on presents over the festive period.

People over the age of 65 were less likely to say they had reduced their budget, with around 45 per cent of this age bracket saying they would keep their budget the same.

Overall, almost a third of those that took part in the survey said that they would cut back on eating and drinking out this year, while 34 per cent said they would cut back on their groceries over Christmas.

Linda Ellett, UK head of consumer markets, retail and leisure for KPMG, said that even if people planned to spend the same amount as last year, the volumes they receive may be less due to inflation.

“The upshot of this for retailers is continued competition for shrinking consumer spend and reduced volume and a need to capture audiences via strong campaigns, well targeted promotions and discounting and great customer experience,” Ellett added. “Older consumers told us that they were least likely to have to cut their gift buying budgets – so focus on that group and the presents for kids and grandchildren may be key.

“Retailers will of course also know that getting people of all ages spending early on Christmas gifts can often mean they end up spending more overall due to the likes of late impulse purchases.”

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