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How much do we spend at Christmas?

Chapters

    What do we spend at Christmas?

    A typical household in the UK spends over £2,000 each month.

    But in the run up to Christmas our spending habits change dramatically.

    To begin with we buy a lot more!  A typical household spends over £500 extra in December.

    The increase in our spending reveals a lot about what we get up to around Christmas.

    It won’t come as a surprise to learn that we spend a lot more on going out, eating food and drinking alcohol. We also of course spend money buying gifts for our family and friends.

    How much more do we spend in December compared to a typical month?

    spend

    Increase in spend in December (in purple) compared to a typical month (in pink).

    How has our spending at Christmas changed over time?

    The most popular Christmas presents from over the years are now seen as classics 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, the Millennium Falcon cost around £20. Fast forward to The Force Awakens in 2015 and the toy is still in the bestseller lists at around £50.

    But the way we buy things is changing. The value of online shopping has more than doubled in just the past three years.  It now accounts for £1 in every £8 we spend.

    And new events such as Black Friday and Cyber Monday mean that we spend more in November too, particularly as many shops have moved from one-day to week-long events to tempt us to buy our gifts earlier.

    presents-v2

    Why is the Bank of England interested in what we spend?

    Here at the Bank of England 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 total spending in the economy.

    But we need to be careful. Just because people spend more at Christmas doesn’t necessarily mean the economy is strong.

    To help us the Office for National Statistics (ONS) publishes measures of spending that are adjusted to take away the impact of seasonal events such as Christmas. This helps us capture the true strength of spending across the UK economy.

    The festive period in 2015 was a good example of this.  Even though consumer spending rose by over 10% between November and December, on a seasonally-adjusted basis it actually fell.

    It’s these seasonally adjusted figures that you’ll normally see quoted in the news for economic data like consumer spending, output or inflation.

    Taking all this information on the economy together, we set interest rates – normally eight times a year – to help to ensure that price rises are limited. By meeting this target for limited inflation, we help support a stable and healthy economy.

    3 comments

    1. Ann-Marie Millar
      20th December 2016

      I am oddly comforted by the fact that book buying still increases (by the most too) at Christmas.

    2. David Hoskins
      28th December 2016

      The graphic showing increase in spend in December is misleading as it appears to apply to the diameter of the bubble, not the area

    3. Kinga
      30th January 2017

      Very interesting!

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