UK Christmas retail growth is predicted to increase by just 3.4%, compared to the 6.2% jump last year, GlobalData forecasts.
The growth slowdown comes as shoppers face a 9.3% hike in retail prices, according to the data analytics company.
The figures represents the second quarter of slowing growth this year, after a peak of 5.2% in the second quarter.
Food and grocery is predicted to be the fastest growing sector this Christmas, with customers spending £2.8bn more during the quarter than last year.
Meanwhile, clothing and footwear is forecast to grow the fastest of the non-food sectors.
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GlobalData’s latest retail spending index, which is calculated by subtracting the number of households that say they will reduce their spending from those that will increase it, sat at -56.4 last month.
The firm said that suggests that retailers will need to inspire shoppers and emphasise value to encourage them to spend.
GlobalData lead retail analyst Nick Gladding said: “This year’s growth in retail sales is driven by inflation, which GlobalData expects to reach 9.3% for the year as a whole.
“Sharply higher prices mean shoppers will spend less in real terms than last year, choosing either to trade down or trim the number of presents they buy”.
He continued: “Last year sales growth was supported by shoppers spending savings built up during the lockdown.
“But with those savings now depleted by cost-of-living increases and mortgage rate hikes, consumers are likely to shop more cautiously and more savvily”.
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