A new survey by Intersperience, the international consumer research specialist, showed that four out of ten shoppers said economic uncertainty made them more cautious when spending.
Overall, the UK public spent around £245 million less than last year for Christmas.
Poor weather boosted internet sales, with 35 per cent of shoppers spending more online than they had intended. However, 68 per cent of people said they experienced some kind of problem with website purchases this Christmas.
Paul Hudson, chief executive of Intersperience, said: “Our survey clearly shows that economic confidence had a bigger negative influence on actual Christmas spending than snow.
"Harsh weather drove more people online, but consumers told us even before the snow hit that they would spend less. People feel the financial situation is more negative than last year and that remains a key worry for the retail sector.”
Consumers over the age of 25, who account for the vast majority of retail sales, spent £313 per head, which was £7 per head less than last year.
Hudson continued: “Over the years our surveys show that people always spend more than they intend to but this time 70 per cent of shoppers who set a budget stuck to it, which is unusually high.
"It is clear that people are keeping a much tighter rein on their finances, even though the recession officially ended many months ago.”
Consumers also said online shopping would be more important to them this year than ever. While 81 per cent of consumers shopped online, this is a much lower proportion than had been anticipated.
One in six online shoppers, failed to receive at least one present by Christmas Day, while 11 per cent received a wrong item or something they were not expecting. And 25 per cent of consumers spent less online as a result of such problems.
Hudson concluded: “Overall, online retailing failed to live up to people's expectations and the problems they faced receiving orders put them off further internet purchases.”