Retail sales are forecast to rise a further 2.9% this year, as inflation drives spending to unprecedented levels.
The Shopping for Christmas Report, by leading savings site VoucherCodes.co.uk, reveals UK consumers will spend £93.76 billion over the six-week Christmas period (mid-November through end of December) - an extra £2.64bn on top of the £91.12bn spent in 2025.
While total retail spending is up, sales volume is expected to fall by a marginal 0.2% year-on-year. This indicates that the value growth is largely driven by inflationary pressures rather than consumers purchasing more items.
Despite dwindling purchase volume, the UK is set to lead European Christmas retail spend. Germany is set to trail behind in second place at £74.78bn, even with its’ larger population size, while Spain is projected to enjoy the highest year-on-year growth with sales rising from £25.87bn to £26.86bn (3.5%).
European Retail Sales and Growth. 2023-2025 actuals, 2026 forecast
Looking closer at where UK consumers are spending this Christmas, gifting is leading the way. With gifting spend predicted to rise 3.3% this year, shoppers will spend £11.97bn, outperforming groceries (£8.53bn), holiday travel (£2.36bn), and decorations (£0.65bn).
UK gifting spend by category. 2023-2025 actuals, 2026 forecast.
Gifting spend is mostly divided between a few key categories: toys (£2.13bn), consumer electronics (£2.08bn), clothing and footwear (£2.00bn), and cosmetics (£1.31bn), as consumers move towards fewer, more personalised gifts.
Moji Oshisanya, Chief Commercial Officer at VoucherCodes.co.uk, explains: “Our report shows that while festive spend is set to break records this year, the underlying data tells a less joyful story. Consumer budgets are under more stress than ever and after several years of cutting back, Brits are having to prioritise carefully how and where they spend their money to protect their most important Christmas traditions.
“Encouraging consumers to spend is going to be a challenge this year, so retailers will have to use every tool in their arsenal. From competitive pricing and discounts, to offering genuine value and a seamless customer experience, consumers need to feel confident that they’re making the right choice when shopping with you."