What Impact Will the Cost of Living Crisis Have on the Festive Period?

Government types are fond of claiming that everything's rosy and that prices are under control. Tell that to the bloke who now pays 50% more for petrol than he did just a couple of years ago. Or try telling parents who are paying 10% more to feed their kids this year than they were paying just a year ago that everything is hunky dory.

The truth is that the UK's current cost of living crisis (the worst in nearly 50 years) is forcing average people to make hard choices they never imagined making just a few years ago. In this article, we look at what impact the cost of living crisis will have on the upcoming festive period.

Where We Stand

For months on end, food inflation has been stuck above 10% per month. In fact, for the entire first half of 2023, it was between 15 - 20% per month. Combine that with the aforementioned surge in energy prices and the result, according to Barclaycard, is that nearly 50% of UK residents plan to cut back on their spending during the festive season this year.

That means fewer gifts and a lot less money spent on socialising during the holiday season.

What Can Be Done?

Besides buying into the government’s fantasy that everything is alright, is there anything one can do to lessen the bite of higher prices and salvage the festive season? We think so, and below we’ll provide some helpful tips on how to have a festive holiday in spite of high inflation.

Tip #1: Don’t borrow money unless you absolutely have to

Everyone wants to deliver for the people they care about at holiday time. So when money for gifts and the like is more difficult to come by there are those who will look to borrow in order to ensure there’s something nice under the tree. We totally understand and respect that.

We would, however, strongly suggest you be careful how much you borrow and who you borrow from. Using credit cards to bridge the cash gap is common enough. But remember, once the holidays are over the bill is going to come due. So use restraint. For example: instead of a 100ml bottle of perfume, get a 50ml one.

And be particularly wary of payday loans. In 2018, the government started clamping down on this type of short-term, high-interest lending. And not a moment too soon because some of these predatory lenders had been charging up to 5,000% interest!

Today, there are less than 40 authorised payday lenders left in the UK. And while they no longer charge 5,000% interest we would strongly advise steering clear of them anyway.

Tip #2: Rediscover domestic bliss

Big nights out on the town during the festive season are great. But they’re not the be-all end-all. One smart way to stay within your budget and still have a wonderful time this year is to swap expensive nights out for special nights in.

Instead of spending 300 quid on dinner for 2 at a fancy restaurant, use that money to finance a Christmas party your friends and family won’t soon forget. If you’re not much on cooking, not to worry! Schedule a night at home with friends when you binge watch holiday-related movies. It’s often the simplest pleasures that produce the most durable memories.

Tip #3: Be wary of deals that sound too good to be true

If nothing else the holiday season is the season of marketing hype. Everyone with something to sell wants to snag your money before someone else does. As a result, they announce all manner of holiday promos in big, bold letters that are splashed across storefront windows, on buses, on the TV and anywhere else they can find space.

The thing is, a little research reveals that those “special” holiday prices are really not so special after all. Studies frequently reveal that a huge proportion of items allegedly discounted during Black Friday sales have typically been the same price or even less earlier on in the year.

Our tip in this case would be to check prices a couple of months before the holidays arrive and then compare them with the “special” prices being offered in the run-up to Christmas.

Tip #4: Buy big ticket items after Christmas

If there is something you really want to get for someone but it’s currently beyond your budget, consider waiting until shortly after Christmas to get it. Post-Christmas sales start on Boxing Day and continue on into January. Chances are good that if you wait you’ll find what you’re looking for at a reduced price.

This is especially true when it comes to electronics, but it also extends to things like clothing, toys and even health club memberships. Businesses need to do something to generate income in the weeks after Christmas so this is when you can often find some of the best deals of the year.

Tip #5: Remember, this too will pass

When times are difficult it can seem like there is no light on the horizon. But economics is cyclical and eventually the pendulum swings back the other way. So even if you need to cut back during this particular festive season, remember that eventually the ship will right itself.

The main thing is to not make a difficult situation even worse than it already is, which means avoiding payday loans, only taking out the credit card when it’s absolutely necessary and coming up with creative and fulfilling ways to make the most of the money you have available.

The holidays, after all, are not about who has the shiniest stuff. They’re about spending time with the people who make your life worth living, renewing bonds, reflecting on the year drawing to a close and looking forward to the one that’s about to start. You’ll notice the word “shopping” isn’t included in any of those things.