The sales of Christmas toys, usually impervious to financial worries elsewhere, were "significantly" down last year, according to industry experts, bringing them in line with much of the rest of the high street.
According to David Hawtin, director general of the British Toy and Hobby Association, nervousness about the global credit crunch and the much-publicised crisis at Northern Rock made many parents think twice about how much they spent last Christmas.
"It has been very disappointing for the industry," he told Guardian Unlimited. "People are very nervous".
"The toy market did not do any worse than other markets, but it certainly was not the shining star of previous years. Sales are expected to be significantly down on 2006."
Character Group, the firm behind three of this year's top 12 "must-have" toys - the Doctor Who Dalek Voice Changer Mask, Flytech Dragonfly and Bindeez - said today that Christmas sales have been "disappointing" thanks to the poor retail trading environment.
In a trading update this morning, the group which also produces the popular Spiderman, Postman Pat and Peppa Pig toys, said it had also suffered from a product recall of its Bindeez bead toys. This followed several incidents where children were hospitalised after swallowing the beads.
Full figures have not yet emerged for the entire Christmas period, but the Toy and Hobby Association said sales were down by 6% at the start of December.
The group, which represents 80% of toy manufacturers and importers such as Hasbro, Mattel and Playmobil, said the falls were unprecedented.
Val Stedham, the association's president, said: "The golden rule has always been that if you are going to look after anybody at Christmas, you are going to look after the kids. That wasn't the case this time."
The toy industry is also suffering from a shift in priorities among the younger generation. Children are asking for mobile phones and fashion items ahead of toys at an ever younger age.