LONDON – With the holiday season just around the corner, the pre-Christmas shopping frenzy is quieter than usual across Europe as rising energy and food prices have taken a heavy toll on consumer confidence, disrupting people’s spending plans.
“It affects us a lot, the Christmas meals, the gifts, their number and their cost. This year we are especially careful about all of these,” Sedgkin, a resident of the United Kingdom (UK), told Xinhua.
Diego Gonzalez lives in Ireland. His family usually leaves the lights on until Christmas Eve in front of their house, but this year will be different. “Now we enjoy the lights for two or three hours maximum because electricity is quite expensive,” he said.
Inflation was high in Europe throughout the year and is still in double digits. In the Eurozone it reached 10% in November, and the UK Consumer Price Index (CPI) rose 10.7% in the same month, both well above the official target of 2%.
High prices in most traditional goods sectors, five straight quarters of real income declines and subdued consumer confidence all suggest that Christmas sales will disappoint in the eurozone, said Thomas Dvorak, senior economist at Oxford Economics.
“Given the throbbing sentiment and cost-of-living crisis, we doubt consumers will spend much of their remaining excess savings on discretionary items,” he said.
Across Europe, consumer sentiment remains mixed. Leonida, a shopper in Ljubljana, Slovenia, told Xinhua that she had narrowed down her Christmas gift list. In Bratislava, Slovakia, Beata had to buy fewer gifts than in previous years, and the same goes for the winter holidays.
“This year, we don’t have any lights because of the energy and price crisis,” said Kim Becka, secretary at the Helsingør Trade Council in Denmark. “As a family, we decided to spend less on Christmas presents.”
Surveys show that people in Croatia will travel less during the holidays and spend more time with their families and friends, said Kresimir Saber, president of the Independent Trade Unions of Croatia (NHS).
As footfall declines, retailers struggle. In the eurozone, consumers are less likely to skimp on Christmas sales and are more likely to be thrifty, and retailers’ assessment of current and expected business conditions ahead of the holiday season was bleak, according to Dvorak.
“We expect the impact of high inflation on consumption to deepen at least early next year, although we expect the decline in real wages to soften,” commented Lubomir Kursanek, chief economist at UniCredit Bank in Bratislava, Slovakia.
In the UK, “we have now entered this very difficult period of high inflation, high business costs and low customer confidence,” said Andrew Goodacre, chief executive of the British Independent Retailers Association (Bira).
“It’s a very toxic mix for any business,” he added.
Although retail sales grew at a moderate pace in the year to December, retailers do not expect the recovery to continue into the new year, expecting sales to fall again in the year to January, according to a survey released by the Confederation of British Industry (CBI) on Wednesday.
“Any celebratory cheer is likely to be short-lived,” said Martin Sartorius, chief economist at the CBI. “Retailers are bracing themselves for the chilling winds that will blow through the sector this coming winter, when consumer spending is expected to be hit hard by high inflation in 2023.”