(Bloomberg) -- Holiday sales will grow at a significantly slower pace than last year, according to forecasts from the National Retail Federation.
The industry’s sales are expected to grow by 6% to 8% in November and December from a year earlier, the NRF said on Thursday. That’s well below last year’s record 13.5% increase.
This year’s growth will likely be supported by a robust labor market and solid wage growth. But higher inflation, rising interest rates and growing economic uncertainty will weigh on holiday purchases, particularly for low-income consumers.
“We’re seeing continued stratification among households based on income levels. Behavior and spending at higher levels continues to be robust,” Matt Shay, the NRF’s president and chief executive officer, said on a call with reporters. “Those lower-income households in particular are feeling the pinch of rising costs on everyday essentials.”
Since last year, shoppers have shifted spending away from apparel and furniture and toward experiences such as travel and dining out, further weighing on retailers’ performance.
Brands, especially in home goods and fashion, have said in recent months that they plan to offer deeper discounts this holiday season to attract price-sensitive consumers -- and also to offload excess inventory that’s built up.
“We do know that consumers are looking for discounts, for deals, for value to stretch their dollars in the face of higher energy and housing prices,” Shay said. “And we think that’s going to continue for the holiday season.”
The NRF’s forecasts aren’t adjusted for inflation, meaning that higher prices may contribute to the anticipated sales growth more than the volume of goods sold. US consumer prices rose by 8.2% in September, according to the latest data from the Bureau of Labor Statistics.
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