Holiday Central

Low-income consumers plan to spend more this holiday

Low-income shoppers plan to spend more this holiday

Low-income shoppers are feeling better about their finances and are seen fueling a rise in holiday spending this year, a new study has found.

Households with an annual income of less than $50,000 plan to spend $837 on gifts, travel and entertainment this Christmas, up 23 percent from 2015, according to PwC. While households earning more than that amount will shell out substantially more — an average $1,388 — that figure would represent just 4 percent growth.

The wealthiest shoppers plan to rein in their spending, with those households earning $150,000 or more saying they'll spend $1,812. That would be a 3 percent dip compared with last year.

Households earning between $100,000 and $149,999 are seen tightening their grip even more, and are planning to shell out $1,394 — down 10 percent from last year.

Overall, PwC expects holiday spending to rise 10 percent this year, to $1,121 per household. The firm based its results on a survey of more than 2,100 consumers.

"There's a willingness to spend," Steve Barr, leader of PwC's U.S. retail and consumer practice, told CNBC.

PwC's findings come amid ongoing debate about the health of the low-end consumer, who has been sending mixed signals to retailers. While Wal-Mart's U.S. division recorded its greatest comparable sales gain in four years during the second quarter, trends at the major dollar store chains slowed.

A drop in fuel prices, hikes in the minimum wage and a lower unemployment rate are all padding these shoppers' wallets. However, they're also spending more on health care and housing.

Meanwhile, wealthy shoppers have been reluctant to spend amid concerns about the global economy. They've also been spending more of their discretionary dollars on travel and entertainment as opposed to physical goods, research has found.

Overall, shoppers plan to spend 9 percent more on travel and entertainment this holiday, for an average $466, according to PwC. That compares with an anticipated 11 percent lift in spending on gifts, at $655.

Yet with digital sales expected to rise 25 percent, store-based retailers will "struggle" to capture the uptick in consumer spending, Barr said. A separate PwC study found that 90 percent of consumers identified as Amazon shoppers; among that group, 40 percent said they are shopping less frequently at retail stores.

"That incremental spend is going to other places," Barr said.

PwC's forecast is well above projections from firms including Deloitte and RetailNext, which predict spending will increase somewhere between 3 percent and 4 percent. Those firms do not include travel and entertainment in their forecasts.