NRF: Healthy Holiday Sales Expected Despite Inflation, Rising Interest Rates

Despite high inflation and rising interest rates, the National Retail Federation (NRF) said last week it expects healthy holiday sales thanks to things such as job growth, salary increases, and higher savings rates. More specifically, NRF forecasts that holiday sales will rise between 6 percent and 8 percent this year compared to 2021, reaching between $942.6 billion and $960.4 billion. The forecast follows last year’s 13.5 percent growth and is above the 4.9 percent average over the past 10 years.

NRF also said it expects online and other non-store sales to increase between 10 percent and 12 percent to between $262.8 billion and $267.6 billion. This figure is up from $238.9 billion last year, which saw growth in digital channels as consumers turned to online shopping to meet their holiday needs during the pandemic. While e-commerce will remain important, households are also expected to shift back to in-store shopping and a more traditional holiday shopping experience, NRF said.

“This holiday season cycle is anything but typical,” said Jack Kleinhenz, NRF's chief economist. "NRF’s holiday forecast takes a number of factors into consideration, but the overall outlook is generally positive as consumer fundamentals continue to support economic activity. Despite record levels of inflation, rising interest rates and low levels of confidence, consumers have been steadfast in their spending and remain in the driver’s seat.” 

Kleinhenz added that the holiday shopping season kicked off earlier this year — a growing trend in recent years — as shoppers are concerned about inflation and availability of products.

Total Retail's Take: NRF's positive holiday forecast matches other industry observers. Adobe, for example, expects online shopping sales to reach $209.7 billion this holiday season (Nov. 1 - Dec. 31), representing a 2.5 percent year-over-year (YoY) growth. And like NRF, Adobe said consumers will begin spending earlier this year thanks to an uncertain economic environment.

However, while retailers face a multitude of challenges, one is totally out of their hands. Weather, as always, plays a role in holiday retail sales, according to NRF. The National Oceanic and Atmospheric Administration (NOAA) is forecasting warmer-than-average temperatures for the Southwest, Gulf Coast and Eastern Seaboard, which cover a large swath of the U.S. population, but wetter and snowier conditions are expected for parts of the Northern tier.