Inflation, Rising Interest Rates Put a Damper on Holiday Sales
Holiday sales fell short of the National Retail Federation’s expectations, rising only 5 percent year-over-year.
Retail sales during the Nov. 1-Dec. 31 period were up 5 percent year-over-year to $936.3 billion, falling short of the NRF’s forecast of 6 to 8 percent sales growth and $942.6 billion-$960.4 billion in total sales.
The 2022 holiday season was up against tough comparables, with last year’s sales up nearly 14 percent to a then-record-breaking $889.3 billion.
When calculating retail sales, NRF excludes automobile dealers, gas stations, and restaurants to zero in on core retail. The numbers are not adjusted for inflation.
Online and other non-store sales rose 10 percent to $261.6 billion, in line with NRF’s forecast of growth between 10 and 12 percent and total sales of $262.8 billion to $267.6 billion.
“The last two years of retail sales have been unprecedented, and no one ever thought it was sustainable,” said NRF President and CEO Matthew Shay.
Despite the year-end slowdown, annual sales were strong in the face of historic inflation and rising interest rates.
Full-year sales were up 7 percent year-over-year to $4.9 trillion, in line with NRF’s forecast of 6-8 percent growth for the year.
“Consumers shopped in record numbers and retailers delivered positive holiday experiences to inflation-wary consumers, offering great products at more promotional price levels to fit their stretched budgets,” said Shay.
“The fact that we saw retail sales growth on top of December’s 14 percent gain in 2022 shows the resilience of consumers and the creativity of retailers in driving consumption and economic activity while addressing high inflation and continued cost pressures.”
The average holiday sales growth over the previous 10 years was around 5 percent, making this year’s numbers all the more impressive, noted NRF, especially in light of the economic headwinds.
Inflation and rising interest rates weren’t the only Grinches of the holiday season.
“We knew it could be touch-and-go for final holiday sales given early shopping in October that likely pulled some sales forward plus price pressures and cold, stormy weather,” said NRF Chief Economist Jack Kleinhenz.
“The pace of spending was choppy, and consumers may have pulled back more than we had hoped, but these numbers show that they navigated a challenging, inflation-driven environment reasonably well.”
For the holiday season, all but two of the nine retail categories NRF tracks saw year-over-year growth.
Growth was led by online sales (10 percent), followed by grocery and beverage stores (8 percent), then general merchandise and sporting goods stores (both up 4 percent).
The decliners were electronics and appliance stores (6 percent) and furniture stores (1 percent).
“The bottom line is that consumers are still engaged and shopping despite everything happening around them,” said Kleinhenz.
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