Inflation to dampen holiday spending, retail trade group forecasts

by | Nov 3, 2022 | Business

Shoppers ascend and descend an escalator at the Willow Grove Park Mall in Willow Grove, Pennsylvania, November 14, 2020.Mark Makela | ReutersGetting shoppers to spend this holiday season won’t be easy.The National Retail Federation said Thursday that it expects holiday sales during November and December to rise between 6% and 8% from last year — a decline when factoring in the effect of inflation. The sales forecast excludes spending at automobile dealers, gasoline stations and restaurants.As of September, inflation is up 8.2% from a year ago, according to the Bureau of Labor Statistics’ consumer price index. That is a near four-decade high. The NRF, for its part, pointed to the personal consumption expenditures price index, which has increased 5.1% from a year ago, as a more apt measure to reflect rising consumer prices.The outlook comes after the pandemic fueled two years of exceptional demand during the key holiday shopping season. In 2020, holiday sales rose 8.2% from the previous year to $777.3 billion, according to the NRF, as consumers cheered themselves up with gift-giving during the pandemic. Last year, holiday sales grew 13.5% over 2020 and totaled $889.3 billion. The trade group’s outlook indicates a more challenging holiday ahead for retailers. A year ago, consumers shopped early and spent more to secure gifts as stores struggled to keep shelves stocked amid shipping delays. This year, however, major retailers including Walmart and Nike are swimming in extra inventory. And consumers are splurging less on items like clothing and electronics as they pay more for groceries and services like dining out and travel.NRF Chief Executive Matt Shay told CNBC that Americans are still eager to spend this holiday season, but have become more cautious. In some cases, he said, they are dippi …

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