Europeans seem keen to relish in the good times that the festive season brings. No doubt marked by several successive years of inflation, this 2024 holiday season promises some welcome relief, even as budgetary restrictions continue to put a strain on household spending.
According to Eurostat, which recently published an update on the economic situation in the eurozone, the annual inflation rate stood at 2.3% in November, compared to 2% in October. The upward trend is partly driven by the rise in consumer food prices, which also include alcohol and tobacco in the calculations of the European Union’s statistics office. Inflation in this market segment stands at 2.8% in November 2024. Still, a year ago, inflation in the same segment was estimated at 6.9%. This could explain the differences in consumer perceptions between Christmas 2023 and the 2024 holiday season.
As a result, Europeans’ overall spending on the festive season (November and December) is set to increase by around 2.9% year-on-year, according to research by Mastercard Economics Institute/SpendingPulse, which covers nine European markets: the Czech Republic, France, Germany, Hungary, Italy, the Netherlands, Poland, Spain and the UK. The study covers both in-store and online purchases.
While they show resilience as they navigate a complex economic landscape, European consumers will adopt pragmatic approaches to spending.
According to this analysis, over the past two years, rising prices and interest rates have heightened price sensitivity among European consumers. Indeed, faced with inflation, many consumers have switched from high-end brands to more affordable ones, the report explains.
"European consumers enter the 2024 holiday season with higher confidence than last year yet remain mindful in their spending. When spending, shoppers are prioritizing key gifting categories such as fashion, beauty, and electronics, with heightened sensitivity to price—evidenced by a strong focus on Black Friday deals to maximize value,” highlighted Natalia Lechmanova, Chief Economist Europe at Mastercard Economics Institute.
Beauty, fashion and electronics are also popular gifting categories poised to grow further during this holiday season. From November 1st to December 24th 2024, spending in the Electronics sector is expected to increase most in the UK (+4.7% YoY), Germany (+3.9%), Hungary (+1.8% YoY) and Netherlands (+1.5% YoY).
Last but not least, Europeans will also be indulging themselves with vacations and restaurant trips. According to Mastercard, spending on tourist accommodation and eating out is set to rise considerably, by 5.2% and 3.4% respectively.
