Want to know where the economy is heading? Then read my lips. The boss of John Lewis has pointed to a return of “the lipstick effect” – when a rise in sales of beauty products heralds a consumer squeeze.

With disposable income under pressure, shoppers are holding off on buying big ticket household items like sofas, beds and washing machines. But tough times also encourage shoppers to treat themselves, and history has shown that sales of cheap thrills – from lipstick to takeaway coffee, expensive perfume, skin cream and sparkling wine – can do well in a downturn.

“The backdrop is very uncertain and it was made worse by the tragic events that happened across British cities over the last few months,” said Paula Nickolds, managing director of the John Lewis department stores chain, referring to the terror attacks in London and Manchester.

She said John Lewis’s middle England customers were now feeling “uncertain and worried about what the circumstances will mean for their future financial prosperity” and so are beginning to change their shopping behaviour.

“It’s the more considered categories, the arguably deferrable spend, that we’re seeing most affected by the uncertainty in the macro conditions – so those big ticket categories are currently trading just behind last year,” said Nickolds.

However, Nickolds said trading in “spontaneous” categories, was holding up robustly. Beauty product sales are up more than 7% on last year and womenswear is up 4.4%. Sales of lipstick rose 31% in the three months to the end of June against the same period last year with Instagram-friendly brightly coloured summer lip shades especially highly sought after.

“Perhaps [it’s] the lipstick effect as we might have called it back in the recession [of 2008],” Nickolds said.

The link between make-up and economic times is an old one. When an executive at Estée Lauder noted that sales of expensive lipsticks soared in the wake of the 9/11 terror attacks, he dubbed it the Lipstick Index – an alternative economic indicator that sees make-up sales rise in a downturn. In the four years from 1929 to 1933, industrial production in the US halved, but sales of cosmetics rose.

“It’s not always lipstick that benefits,” said Toby Clark at Mintel. “In the last recession premium fragrances did really well. Beauty is just a really good example of an indulgent purchase that is relatively affordable so you can treat yourself without breaking the bank.”

He said that when spare cash is tight, people try to save on dull basics, going for budget shampoos, milk from a discount chain or holding on to an ageing bed or washing machine, in order to afford feel-good treats where they believe they get more value for money.

In the last downturn home baking goods sold well, even though it can be more expensive to make a cake at home.

“In many ways, home baking is a luxury purchase but you don’t just get cakes” Clark added. “You get an experience, the satisfaction of making something and family time,.

“Even if you spend more than you would on a tray bake from the local supermarket you feel you get more bang for your buck.”

People search for better value for money in a host of different ways. They look beyond their regular supermarket chain to budget outlets. They switch from eating out at restaurants to going out only for a coffee and cake or eating a premium ready meal at home and they will trade down from branded goods to own labels. Market research group Kantar recently reported that supermarkets’ own label sales were up 6% year on year in contrast to just a 0.6% rise in branded products.

They also try to cut down on waste – leading to higher sales of frozen food.

Holidays abroad are also likely to suffer – especially since the slumping pound has made European destinations more expensive. But holidays are considered an essential by most families so British resorts – and especially campsites – are set to benefit this summer. Staycations boomed and Britons took nearly 3m more camping and caravanning holidays in 2009, the height of the last downturn, than they did in 2008.

The sharp change in spending behaviour noted at John Lewis comes amid growing signs of a consumer slowdown.

Official data published last month showed British workers’ earnings after inflation have been shrinking at their fastest pace since 2014.

Last week credit and debit card provider Visa noted the fastest fall in household spending in almost four years as shoppers reined in on household goods and trips out – down 3.4% and 1.2% respectively.

“It’s clear that inflation is beginning to affect shopping habits too, with consumers diverting their spending to essentials,” said Kevin Jenkins, UK & Ireland managing director at Visa.

Last month sofa retailer DFS issued a surprise profit warning, blaming falling consumer confidence for a slump in the number of visitors to its stores. Online kitchen appliances specialist AO World has also warned of a slowdown.