How much do we spend at Christmas?

A typical UK household spends over £500 more in December compared to other months.

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?

How much do we spend at Christmas - 1
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 Last Jedi in 2017 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 nearly doubled in just the past three years. It now accounts for £1 in every £6 we spend.

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

How much do we spend at Christmas - 2

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 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 2017 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 of 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 and for limited inflation, we help support a stable and healthy economy.

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