Holiday Retail Sales: How Consumers are Responding to Inflation and the Growing Prices of High-Priced Goods in the 21st Century

Although gifting will be important for families, many of them will be buying fewer gifts for fewer people this year as households grapple with persistent high inflation – consumer prices increased by 8.2% in September over last year. Consumers are budgeting differently for everyday necessities and occasional indulgences.

Retail sales for the combined November-December shopping months will grow between 6% and 8% this year compared with the 2021 holiday season, to between $942.6 billion and $960.4 billion, according to projections released Thursday from the National Retail Federation, the industry’s largest trade group.

Matthew Shay, NRF president and CEO said in a statement that consumers overall are resilient and continue to spend even as they feel the pressure of inflation and higher prices.

The group predicts a 10% and 12% increase in online holiday spending to between $262.8 billion and $267 billion, up from $238.9 billion in 2021.

Shay added that retailers have done a good job kicking off the holiday season earlier than usual this year, in some cases rolling out some Black Friday-like promotions in early October. This has helped jump start holiday sales before the season starts, and could possibly support more sales increases in the coming weeks.

This year is expected to have slower growth compared with last year but is in line with how holiday retail sales were before the economy tanked.

In October and November, US shoppers spent less than they did a year ago. And for once, lower prices and sales seem to be part of the story.

All this happened as inflation appeared to slow down. Prices have been easing in many of the same categories: cars, gas, furniture and appliances. In November stores also pushed big sales — on clothes, TVs, computers and smartphones — as they faced a persistent glut of inventory.

“If you look very closely at the details, today’s retail sales report actually tell the story of a consumer that is way more engaged in the real world service economy compared to a year ago,” Wells Fargo economists wrote.