The cost of Christmas can add up (Picture: Getty Images)
Christmas prep is in full swing, but with the cost of living crisis continuing to grip the nation, this festive season may be a difficult one for many.
Rising costs of everything from energy bills to your weekly grocery shop means that many families across Britain are looking to cut costs where they can.
And with the big day on the not-so-distant horizon, that can prove to be quite tricky.
But how much does the average family spend at Christmas and where does that money go?
How much does the average family spend at Christmas?
December proves to be an expensive month for most families across the UK (Picture: Getty Images)
It should come as no surprise that December is an expensive month for families.
The average household spends £2,500 monthly, with that total rising more than £700 in December according to the Bank of England (BoE).
The BoE says the average family spends an extra £740 in the run-up to Christmas, taking us to £3,240 – which works out at 29% extra.
This year, Finder estimates that Brits are expected to spend an average of £923 per person gifts, food, travel and socialising over the Christmas period, totalling to a huge £46.4 billion.
While the average spend on gifts per person in its research was £596, Millennials are set to fork out £871 each just on presents, and the figure for Londoners sits at a whopping £936.
What do families spend the most money on?
Spending changes drastically during the festive period (Picture: Getty Images)
Data from the BoE found that things that only make up a small portion of our spending for 11 months of the year suddenly increase in December.
Spending on video and music equipment and books grows the most, from the average spend for the rest of the year of 0.23% skyrocketing to 95%.
Book sales also double in December, while sales for computers and phones rise from 1.1% to 61%.
What we spend on tasty treats also increases as families stock up on mulled wine and mince pies for their Christmas festivities.
Spending on food and alcohol goes up by an average of 20% and 38% respectively according to the data.
However, the run-up to Christmas does see families curb their spending in other areas.
Spending on goods such as paints and hardware goes down by 21%, as we delay these jobs until after the festive period.
This article was first published on November 27, 2022.
The outlook is far from sweet (Picture: Getty/Katie Ingham)
‘Honestly shocking, the treats aisle is for the wealthy folk now.’
This is just one of the observations Metro readers sent in response to a viral Instagram Story about the price of chocolate in British and Irish supermarkets.
‘That’s actually robbery,’ another replied to a photo of an €8.50 Kinder egg in a Dublin Tesco, while a third described the surging cost of sweets as ‘outrageous.’
Anger over the cost of living is nothing new, but recent months have seen rage over the rocketing price of chocolate reach new highs. ‘Are you taking the p***?’ asked TikToker Megzy, when he spotted Cadbury Oreo bars had gone up by 50p at his local shop. ‘UK prices have gone too far,’ he added.
Under another video about Freddos, oli_little_juju wrote: ‘Comes with a mortgage at this point.’ Chicken Shop Date host Amelia Dimoldenberg even referenced chocolate price hikes in a recent episode, calling it ‘sad’.
On X, Shanika_WM wrote: ‘Cost of living crisis is still out of control! How is a 90g bar of chocolate that used to be £1 now £1.50!!!?!
Another, halfofmyheart_0, said: ‘I hate that chocolate is so expensive now. As in ordinary chocolate???’
Chocolate has historically been recession-proof. In tough times, the downtrodden proletariat need sweet relief more than ever.
But it looks like these simplest of pleasures could be off the cards for many of us from now on, as the price of chocolate continues to soar to unprecedented levels.
The wholesale price of cocoa has seen a four-fold increase over the past year, with climate change being blamed for poor harvests in West Africa, where the majority of global producers are based.
Despite reduced supply, demand for chocolate is growing, resulting in prices peaking on the London Cocoa Futures in April at £9,648 a tonne.
This spike has been passed onto consumers, with Which? deeming chocolate prices the fastest rising of all food categories it researches — in a grim phenomenon dubbed ‘chocflation’.
Looking at the the nation’s favourite brand, Cadbury Dairy Milk, a standard size bar would have set you back 45p in the 90s. Nowadays, it’ll cost you upwards of £1.85.
Snickers and Mars bars set you back 25p before the millennium, and are now between 85p and £1, according to price comparison site Trolley.
And who could forget Freddo, which many joke is the canary in the coalmine of inflation. The iconic 18g chocolate frog was 10p for a long time, but now averages at 30p, a 200% increase since the halcyon days of the 90s.
While it’s not exactly a secret that things become more expensive over time, and an extra 20p here and there is hardly extortion, modern chocflation comes against a backdrop of decades-long wage stagnation, where people have less and less disposable cash.
And even though we’re still buying chocolate in our droves, it now costs more as a proportion of our earnings.
Currently, the average UK household spends 3.78% (£2.40) of its £63.50 a weekly food budget on chocolate. Compare this to 2001, when households spent £41.80 on food, 3.35% (£1.40) of which was on chocolate.
This is to do with something known as the ‘treat economy’, which you may have heard it referred to as the ‘lipstick effect’, after Leonard Lauder, chairman of Estée Lauder, claimed lipstick sales rose exponentially after the 9/11 attacks on the United States.
The idea is that people still tend to buy small luxury items even during an economic downturn, as cash-strapped consumers want to treat themselves to something that lets them forget their financial problems.
Why is chocolate so expensive right now?
There are a few reasons for the hikes, the first being warmer, drier weather across West Africa caused by the El Nino phenomenon of 2023. This resulted in in poor harvests in both Ghana and Ivory Coast, the world’s two biggest producers of cocoa beans, who are responsible for 70% of global supply.
Poor harvests and low yields were also attributed to the effects of crop disease and ageing cocoa plants, as rising costs of pesticides and fertilisers made it difficult for cocoa farmers to afford them, which increased the prevalence of pests and disease.
The cost of other raw materials like sugar has also increased, along with manufacturing overheads from energy to labour.
These issues are underscored by global events including Israel’s war on Gaza (for example, when the Houthi rebels attack commercial shipping in the Red Sea in reprisal, ships are forced to take longer routes) and new EU rules affecting European importing.
It tracks when it comes to our current situation too. A TikTok trend where creators claim ‘If there’s one thing I deserve, it’s a little treat’ has swept the platform, with thousands of videos tagged #LittleTreat and #LittleTreatCulture.
Additionally a recent survey by Barclaycard revealed 47% of people have continued to indulge in minor luxuries even while trying to cut back on other expenses.
So what happens if these minor luxuries become unattainable for certain people? Does the growing price of chocolate mean we risk some Willy Wonka world where the Charlie Buckets in society rarely get to enjoy sweets?
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Chocolate isn’t exactly essential, but sometimes things that seem insignificant can be indicators of wider culture.
Sociologist Jean Baudrillard argued what we buy says a lot about who we are; within what he called a ‘hierarchy of consumers’, those who can afford the goods at the top of the status pyramid are viewed in higher standing.
Anne Murcott, a professor and author specialising in the sociology of food, agrees, telling Metro: ‘Broadly, the type of foods and drinks people take are associated with class and income.
‘In part that is related to price in relation to disposable income. In part it is also cultural, insofar as it is possible to identify “working class cultures” or “habits and conventions of upper class life”.’
What should big chocolate manufacturers do to keep prices down for consumers?
Like most things, these price rises may just pass the upper middle classes by (perhaps because they don’t notice the difference as much or because they consume fewer ‘here and now’ foods than other) while those who are less well off have their limited budgets stretched further.
Marta Pizzetti, Associate Professor of Marketing at Emlyon Business School, tells Metro: ‘Even though it’s not a necessity, it’s something that might be hard for consumer to give up and not buy anymore. So it’s likely that we’ll make sacrifices to buy these kind of products – maybe in smaller quantities – but still, we’re going to buy it.’
The industry itself will also be impacted, but it’s small businesses rather than mega corporations who’ll struggle to keep up.
‘Big organisations have much more power in the market, because they buy in big quantities,’ Marta explains. ‘Small businesses and craft chocolate artisans, who buy in smaller quantities are much more subject to price increases.’
Pricing tactics explained
Price increase: When costs go up for manufacturers, some go for a traditional price increase.
We are often, as consumers, not happy with it,’ says Marta Pizzetti, Associate Professor of Marketing at Emylon Business School. ‘However, to a certain extent we can understand, because we understand the motivation behind this.’
Shrinkflation: Next is shrinkflation, which Marta describes as when they ‘maintain the same price, but reduce the quantity of the product.’
In her team’s research on the topic, they found ‘that actually consumers do prefer to pay more – rather than paying the same but having a lower quantity – because it’s seen as unfair and a misleading strategy.’
Skimpflation: Marta says this is ‘even more difficult to recognise, especially at the point of purchase’ than the previous example, and is when businesses ‘decrease the quality of the product while maintaining the same price.’
This could mean sneakily substituting certain, more expensive ingredients with cheaper alternatives — sometimes just water — to maximise profits.
Greedflation: This is sometimes referred to as ‘profit-led inflation’, but Isabella Weber of the University of Massachusetts, Amherst, calls it ‘sellers’ inflation’, explaining it’s when large corporations ‘have used supply problems as an opportunity to increase prices and scoop windfall profits.’
Marta adds: ‘Basically, they’re taking advantage of the situation to increase the markup and increase their own profits at the expense of consumers.’
Alongside purchasing power due to bulk ordering, she says: ‘Big companies have multiple programs in the regions where cocoa beans are sourced to improve the living conditions of farmers — this gives them a kind of reciprocity relationship where they might be facilitated in negotiating prices, or even with governments.’
For small businesses to compete, they may be able to leverage a trend towards higher quality chocolate among the middle and upper classes, who feel compelled to spend more as long as they’re assured what they’re buying is ‘better’.
Marta says that brand ‘storytelling’ and underscoring ethical or environmentally-friendly practices can ‘increase the willingness to pay for consumers,’ and maintain sales.
In the mass market, the solution is more complicated. It’s unlikely prices will go down, but rises could be limited with effort from manufacturers and retailers.
Mars Wrigley Confectionery’s 2023 profits were up almost 100% on the previous year at £206.2 million, with its shareholders being paid £600 million in dividends. Similarly, Cadbury owner Mondelēz saw more than doubled net earnings at $4.96 billion (£3.9 billion), reporting its best year ever and paying shareholders a nearly $3 billion (£2.36 billion) during the first nine months of 2024 alone.
We can’t know their margins, but it stands to reason that these industry giants could consider absorbing some extra costs rather than passing them onto consumers.
Even if this isn’t feasible, greater transparency can help people make better purchasing decisions, ensuring at the very least they don’t feel misled by tactics like shrinkflation.
According to Marta, retailers are often left out of these debates, despite having ‘much more power’ than consumers to change things.
European supermarket Carrefour, for example, began communicating product quality or size changes to consumers, which led to laws being passed in France and Italy requiring this information be made available to shoppers.
Whether companies will embrace this across the board remains to be seen. Unfortunately, it doesn’t look that likely.
The CEO of US snack food firm Hostess admitted in 2022 that rising prices across the economy ‘helps’ profit because they can raise prices to levels that exceed their increased costs. More recently, Nestle executives said that although it plans to curb huge increases going forward, they’ll continue ‘commensurate with what the consumer can take’.
Perhaps our golden ticket is to show the industry what we won’t take and stop putting our money where our mouths are — it’d be easy enough, if it wasn’t for thatrelentless sweet tooth.
Roxanne Pitteway was with British Gas for nearly a decade before the error made her jump ship (Picture: Kennedy News)
British Gas tried to stop a single mum from withdrawing £5,400 in credit after wrongly billing her £9,000.
Little had changed in the energy usage of Roxanne Pitteway and her four kids since they moved into their Cambridge home in 2015.
She paid the bills through direct debit and didn’t think much more about it, last taking a meter reading 17 months before.
But in November, after a rise in the energy price gap, British Gas recommended the 39-year-old’s monthly payment increase from £250 to £460.
Price hikes often seem extortionate, but not as much as what came next.
Roxanne said: ‘I went on the live chat to ask them if this was right and that I was using this much more energy as it seemed quite a jump.
‘They asked me to send them a meter reading to check and said it [the direct debit] was coming up as this because I was £9,000 in debt.
‘I said “wow” and asked them to check this because it seemed quite a lot and felt like they should have told me beforehand if I was in this much debt.
Roxanne would have been able to afford to new direct debit, but sudden price hikes and surprise debt could hit others hard at Christmas (Picture: Kennedy News & Media)
‘They said it was correct, which is why they had to up my direct debit.
‘I am a single parent and have four children so it was a bit of a shock and obviously would impact what I would be spending over Christmas and your monthly budget.’
Although Roxanne could afford the hit to her budget, an extra £200 plus thousands in debt is ‘enough to absolutely destroy some people’.
But Roxanne wasn’t convinced. She said: ‘There had been no real change in the way we use our energy.
‘I asked them to double check and they came back and said there had been a mistake at their end. [British Gas] told me I had £5,400 in credit.’
Roxanne’s bill claiming she was more than £9,000 in debt (Picture: Kennedy News & Media)
Instead of being £9,000 in debt, British Gas actually owed Roxanne thousands.
But when she asked for this money back, she says British Gas tried to dissuade her.
Roxanne said: ‘I asked for this to be refunded but they advised me not to as you build up an excess over summer to pay for fuel in winter.
‘British Gas asked me if I could afford this and I said yes. They said if I did receive the refund they would have to put my direct debit up to £700.’
Eventually the £5,462.16 landed back in her account on November 26, and Roxanne has since switched energy provider, despite British Gas offering her a better rate to stay.
A spokesperson for Centrica, on behalf of British Gas, said: ‘Mrs Pitteway’s bills were being estimated for some time.
‘When she contacted us on 19th November we took a meter reading, billed her up-to-date and then informed her of the large credit balance.
‘Our advisor processed the refund on the same day – this was then received in Mrs Pitteway’s bank account within 3-5 working days on 26 November.’
It’s all about the difference between LED and incandescent bulbs (Picture: Shutterstock/Getty)
So to help UK households keep costs down but still enjoy the magic of the festive season, Martin Lewis has a handy tip.
Because although your loved ones’ faces as they bask in the glow of twinkly Christmas lights may be priceless, the resulting energy bill can be positively pricey.
In the latest edition of his newsletter, the Money Saving Expert founder revealed how one easy switch can slash the running costs of your Christmas lights by a massive amount.
‘We’ve crunched the numbers to see how much those sparkly lights actually cost,’ says Martin. ‘And the big difference is whether they’re LED lights or incandescent.’
Whereas incandescent lights cost 1p an hour per 100 bulbs, LED lights are far cheaper at around 1p every 12 hours for the same number of bulbs.
Breaking it down, the financial guru continues: ‘If you run a 100-bulb string of LED lights (which uses 3W of energy) for six hours a day for a month it’ll cost roughly 15p.
‘For incandescent bulbs (which use 40W of energy) it’s roughly £1.80. Bigger sets of lights, with more bulbs, would use more energy and cost more.’
LEDs are 12 times cheaper (Picture: Getty Images)
To work out your exact running costs, find the wattage for your lights then multiply this by 24.5p — the current electricity Price Cap. Next, multiply the number of hours you plan to have them on and divide by 1,000 (since there are 1,000 watts in a kilowatt).
You can usually find the wattage on the packaging for your lights, but if you’ve chucked the box, there’s another way to check whether you’ve got LED or the more expensive incandescent.
‘Check if the bulbs are glass or plastic,’ the MSE newsletter explains. ‘Incandescent lights are usually made of glass and get hot when they’ve been left on for a while. You may also be able to see a filament inside. LEDs are generally made of plastic and are cool to touch.’
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The potential savings all depend on the number of lights you have and how long you have them on, but hold your horses before throw out all your decorations.
Martin highlights that while LED is a cheaper option when it comes to energy usage, you still need to factor in the price of replacing older incandescent lights.
He says: ‘You’d likely save in the long-run if you’re planning to use the lights year after year, as LED lights also last a lot longer (up to 50 times) than incandescent bulbs and are cheaper to run.
‘But if you’ve incandescent bulbs, and money’s tight this Christmas, you’re likely better rationing how often you turn the Christmas lights on than shelling out to replace them.’
Martin Lewis and MSE have plenty of advice to cut your bills (Picture: Ken McKay/ITV/Shutterstock)
Keep doors closed. ‘It’ll help keep the heat in, and means your central heating doesn’t have to work as hard,’ advises Martin.
Line your curtains. If you need new curtains anyway, consider lined ones. If not, you can get your hands on cheap fleece blankets for as little as £2 each and line them yourself to ensure no heat is lost through the windows.
Hang curtains inside. You’ll probably need some basic DIY knowledge to do this, but hanging curtains on interior doors can help stop warmth escaping between rooms.
Clingfilm your windows. While it may seem strange, ‘putting a sheet of clingfilm on your windows can trap a small layer of air’ as a kind of homemade draught excluder. This is best suited for those with single glazed windows, and you can use any transparent and airtight material.
Invest in an energy monitor. For around £15, an energy monitor cangive you information on how much electricity an appliance uses, and is worthwhile if you want to keep track.
Let the sun shine in. During the day, make sure you open your curtains and blinds to make the most of the sun’s warmth. Just remember to close them again when it gets dark.
Each of these changes on their own are unlikely to make a huge amount of difference to your spending. When combined, however, they definitely can.
Who said you have to wait until January to get into better habits?
