Spend this Christmas is expected to drop for the first time in five years, spelling bad news for retailers hoping to redeem a turbulent year with a strong final quarter.
New research compiled by HIS Markit for Visa suggests spending on Christmas getaways, clothing and household goods in November and December could dip 0.1 per cent.
High street retailers are expected to bear the brunt of the decline, dropping for the third consecutive year by 2.1 per cent.
Online spend is expected to largely offset this drop, rising 3.6 per cent and accounting for a record 40p in every pound spend this Christmas.
“Looking back, consumers were in a sweet spot in 2016 – low inflation and rising wages meant there was a little extra in household budgets to spend on the festive period,” Visa’s chief commercial officer Mark Antipof said.
“This year has seen a reversal of fortunes – with inflation outpacing wage growth and the recent interest rate rise leaving shoppers with less money in their pockets.
“Although overall sales are likely to disappoint, we expect some clear winners to emerge. Online and mobile are set to take a record share of Christmas spending.
“Hotels, restaurants and bars are also forecast to report strong growth as Britons choose to celebrate Christmas and New Year closer to home.”
The news comes after a succession of worrying figures on retail spend in October, with more than one source reporting record breaking declines, driven by rising inflation and unseasonable weather throughout the month.
High street bellwethers like Marks & Spencer and Next also posted lacklustre results over the past month, adding to retailers’ anxiety over the upcoming Christmas period.