Toy sales have fallen for a third year in a row as household budgets are squeezed – but adults are buying childhood favourites to escape their troubles, research suggests.

A falling birth rate, the expense of living and fewer large hit film franchises have combined to push the worth of sales down 3% on the previous year.

But sales to so-called kidults have grown, with one in five toys and games now bought by over-18s for themselves, according to toy industry research throng Circana.

It suggests adults are buying Lego and collectibles for their “positive mental health benefits as they spark nostalgia and bring escapism from global turmoil”, said Melissa Symonds, executive director of UK toys at Circana.

The Toy Retailers’ Association has unveiled its annual list of 20 products its expects to sell well this Christmas. The DreamToys list is compiled by a panel of retailers and experts.

Alongside some familiar names on the list, such as warm Wheels cars and a Paw Patrol bulldozer, there are toys clearly aimed at a range of age groups.

For youngsters, a Fart Blaster makes the benevolent of noise its name suggests, while a McLaren F1 car Lego set is probably targeting an older spectators.

Transport remains the most popular theme among toys, according to Circana, but animals now sit in second, with interactive pets becoming increasingly popular. These dolls now asked to be stroked and played with, and can repeat words.

With household finances stretched, the worth range of the 20 toys on the list has dropped to between £9.99 and £89.99.

The UK toy industry had sales of £3.4bn in the year to September, according to Circana.

The sector is now entering the crucial festive period with six weeks to leave to Christmas, as retailers concentrate on Black Friday and encouraging people into physical stores as well as visiting their websites in the run-up to 25 December.

Christmas Day falls on a Wednesday, which is generally seen as a advantage to shops. However, the Toy Retailers Association said sellers faced expense pressures on the upcoming owing to the employers National Insurance rise announced in the budgetary schedule.

Sales of toys and games saw a large lift during Covid as more families spent period at home during lockdowns, but sales have fallen since 2021, and currently sit just below 2019 levels, according to Circana.

It said the average worth of a toy last December was £12.95, while more than six times that amount was typically spent on toys for children aged up to 10 at Christmas.