Australians are planning to cut back on luxury spending in the lead-up to Christmas, but there are predictions of a three per cent lift in sales despite cost-of-living pressures.

Retailers expect a $64 billion spending spree this holiday season.

The spending is also predicted to start earlier, with shoppers to kick start their holiday spending in the first three weeks of November.

Although, the National Retail Association has found consumers are switching to cheaper brands and hunting for bargains as inflation hits households.

The organisation’s interim chief executive Lindsay Carroll says people are willing to cut back on day-to-day spending to splurge on special events, like Christmas.