Australians May Spend Less On Christmas This Year

Post by NeilMc on November 16, 2009 · Under Australian Economy, Business News · Comment

New research suggests that families in Australia intend to drastically scale back their Christmas spending this year, preferring instead to look for bargains in order to keep their Christmas shopping costs down.

A new survey by Westpac shows that approximately 35 per cent of Australian households say they intend to spend less this year, and plan to restrain their spending despite growing signs that the economy is rebounding.

The average planned spending on Christmas presents by Australian families this year is $317, and many say they will skip luxury gifts, choosing value for money gifts instead, Matthew Hassan, senior economist with Westpac says.

Mr. Hassan said planned Christmas spending was a “surprisingly cautious response” in light of the fact that overall consumer confidence had declined just 2.5 per cent as a result of interest rate hikes.

“The implications of this are that people will not be looking to be extravagant, they will be looking for bargains, and value for money,” he said.

Mr. Hassan said caution defined the mood across the whole nation and in particular Western Australia.

Over 41 per cent of Western Australian households, which bore the brunt of the financial crisis, say they plan to spend less on Christmas presents this year.

Mr. Hassan said that caution on the part of consumers may also be as a result of the reduction in government subsidies.

“Some of the planned reduction may reflect the boost to last year’s Christmas spending from the government’s $8.7 billion in fiscal payments. This helped drive a 4 percent jump in retail sales December 2008 over and above the normal seasonal rise.” Mr. Hassan said.

Total spending over the holiday season by Australians is expected to top $2.5 billion, according to the November Westpac-Melbourne Institute Consumer Sentiment survey.

14 per cent of households surveyed say they intend to spend more this year, whilst the vast majority, or 40 per cent say they will spend around $500, or the same as they did last year.

Mr. Hassan also said that caution on the part of the Australian consumer did not match overall consumer sentiment, and may ultimately give way to a splurge on spending as the Christmas season intensifies.

“Some of this is likely due to the fiscal boost to spending this time last year, but there may also be a regular bias towards restraint heading into Christmas that eases as the season gets under way,” he said.

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