UK shoppers are expected to spend more this Christmas than last year despite the financial crisis - but the increased expenditure will be driven by the higher cost of food, according to new research.

At a presentation for property consultancy EC Harris today (23 October), retail analysts Verdict Research said that in the "toughest economy for years", retailers should "baton down the hatches".

Faced with a more expensive Christmas this year, consumers are expected be selective with food shopping and careful with their gift purchasing, buying fewer items of both, meaning retailers will have to fight much harder for a share of spending.

Verdict forecasts that UK consumers will spend GBP82.3bn (US$133.2bn) with retailers in the final quarter of 2008, a rise of 2% on 2007.

However, the analysts said the extra GBP1.6bn spent this Christmas will be eaten up by food inflation.

Moreover, with the cost of inflation running at over 3%, Verdict said it also expects the squeeze on retailers' margins to be intense.

"Not surprisingly food and grocery accounts for the largest share of shoppers' spending over the Christmas period (38%), and with food inflation running at 6.3% this quarter, consumers are facing a more expensive Christmas feast," said Maureen Hinton, lead analyst at Verdict.

"But unavoidable though this extra expense will be, shoppers will be more careful in what they buy, balancing spending on treats with cutbacks on everyday foods."

Verdict, meanwhile, has forecast that online spending on food and grocery will jump by 50% this Christmas to GBP2.2bn. Online orders will account for 6.9% of food and grocery spending during the quarter, the researchers said.