The Most Rev Justin Welby said consumerism over the festive period is now so “over the top” that couples are left arguing over money and children are shouted at.
He said he would like to tell people to stop giving gifts altogether but accepts no one would listen.
Instead, he urged families to “show” love and affection rather than trying to “buy it”.
Figures last year suggested the average household spent around £1,000 on Christmas.
In his first comments on Christmas since becoming the Anglican leader, the archbishop acknowledged: “It’s a cliché of modern life that someone gets up and says Christmas is becoming very materialistic as though it wasn’t 300 years ago.”
But he added: “Yes obviously the secular over-the-topness, everything you have to have, new clothes you have to have, new this, new that, new the other, is ridiculous, it’s absurd, it shouldn’t happen.
“It puts pressure on relationships because when you’re short of money you argue. You get cross with your kids more easily, it spoils life.”