What's happened
Food inflation has slowed but remains above target, raising costs for Christmas dinner. The average dinner for four now costs £32.46, slightly less than last year, while household spending on festive food has increased in Australia. Rising prices are impacting consumer behavior and holiday plans in the UK.
What's behind the headline?
Food inflation's slowdown masks ongoing cost pressures. While the CPI for food rose beyond November’s 3.2%, the rate has decreased, leading to a marginally cheaper Christmas dinner for four. Retailers are offering festive deals to attract cautious shoppers, but the overall cost of living squeeze persists.
Consumer behavior is shifting significantly. Over half of Britons plan to buy fewer gifts and host fewer guests, driven by rising household costs. The Liberal Democrats highlight a 'cost-of-giving crisis,' with many cutting back on celebrations and social visits.
The broader economic context shows a mixed picture. Labour claims real earnings are up, citing a £500 annual increase since last year, while government officials emphasize ongoing inflation reduction efforts. These conflicting narratives reflect political and economic tensions.
The story underscores a wider trend: inflation remains a barrier to holiday spending, prompting consumers to prioritize savings. The impact extends beyond the UK, with Australians spending more on festive food, indicating a global inflationary challenge that will likely influence holiday behaviors and economic policies in 2026.
What the papers say
The Independent reports that food inflation in the UK has slowed but remains above the Bank of England’s 2% target, with the average Christmas dinner costing £32.46 for four people, slightly less than last year. The article notes that retailers are offering festive deals to attract cautious shoppers. Meanwhile, polling by Savanta, also cited by The Independent, reveals that over half of Britons are buying fewer gifts and hosting fewer guests due to rising costs. In Australia, SBS highlights that households will spend an average of $506 on festive food, up from $406 in 2024, with experts recommending shopping around and using frozen produce to save money. The contrasting reports illustrate the global impact of inflation on holiday spending, with UK consumers feeling the pinch despite some easing, and Australians increasing their festive food budgets.
How we got here
Food inflation in the UK fluctuated throughout 2025, influenced by supply chain factors and economic pressures. Despite some easing, prices for key Christmas dinner items remain high, prompting shoppers to seek bargains. Meanwhile, household costs for festive celebrations are rising globally, affecting consumer spending and holiday plans.
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