The retail industry's leading trade group announced yesterday that it expects holiday sales growth to be better than it had predicted, thanks to falling gas prices and strong sales during September and October.
This is the first time in at least a decade that the National Retail Federation has revised its forecast, spokeswoman Ellen Davis said. The group now expects sales to grow 6 percent over last year, to $439.53 billion. In September, NRF had forecast a 5 percent increase.
"As gasoline prices decrease, consumers are finding a little extra padding in their budgets," the trade group's chief economist, Rosalind Wells, said in a statement.
According to the Department of Energy, the average price of a gallon of regular gasoline was $2.20 yesterday. That was 9.5 cents less than a week ago.
Though the group said it expects nearly all retail categories to show strong gains this holiday season, luxury stores are on track to do particularly well, Davis said. High-income consumers are less likely to be affected by fluctuations in gas prices, and those with moderate incomes seem to be saving up for more expensive items.
But this time of year, holiday forecasts seem to fall like snowflakes in a blizzard, signs that the season is nothing if not unpredictable. Some analysts worry that even though gas prices may be falling, a steep drop in temperature could send home heating bills soaring -- and keep customers' wallets tucked away.
In fact, the nonprofit Consumer Federation of America and the Credit Union National Association, a trade group, yesterday released the results of their joint holiday shopping survey, which shows more consumers plan to cut back on spending this year. Thirty percent said they would spend less than they did in 2004, while only 14 percent said they would spend more. About half said they planned to spend the same amount.
"While the economy is showing strength, it is also apparent from these numbers that those in the very middle of the economic spectrum are feeling something of a squeeze," Bill Hampel, CUNA's chief economist, said in a statement.
Holiday sales last year grew 6.7 percent, the largest increase since 1999, according to the NRF.
Staff writer Justin Blum contributed to this report.