November 3, 2011 / 3:24 PM / 7 years ago

Squeezed Britons to cut Christmas spending: study

Shoppers are silhouetted on Oxford Street during the last shopping weekend before Christmas, in central London December 18, 2010. REUTERS/Luke MacGregor

LONDON (Reuters) - Britons will spend less this Christmas than a year ago as falling disposable incomes temper the traditional urge to splash out, according to a report published on Thursday.

Retail research group Decipher forecast retail spending would fall 0.6 percent year-on-year in December, or about 200 million pounds ($319 million), with a 1.4 percent rise in food sales offset by a 2.2 percent drop in spending on general merchandise products, particularly electrical goods.

“People do like to put their worries to one side at Christmas. However, this year we believe that financial realities will take precedence over emotion,” said Decipher lead consultant Matt Piner.

“The truth is that the average household has seen disposable income slip by 2.1 percent over the past year. That will simply feed into lower overall spending.”

With shop prices tipped to rise 1.6 percent, Decipher forecast sales volumes would fall 2.3 percent in December.

“With a lack of exciting new electrical products, the maturity of games consoles and televisions and a reluctance to spend on larger items, electricals retailers are likely to fare particularly badly,” it predicted.

“In contrast, lower value ‘treats’ such as clothing and beauty items, are likely to hold up better.”

Decipher’s views contrast with slightly more optimistic forecasts from Britain’s Center of Retail Research and come ahead of a busy week of results from retailers including Marks & Spencer, Carphone Warehouse, J Sainsbury and Wm Morrison.

($1 = 0.626 British Pounds)

Reporting by Mark Potter; Editing by David Holmes

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