US retail trade group forecasts healthy holiday sales, in part due to
inflation
[October 16, 2026] By
ANNE D'INNOCENZIO
NEW YORK (AP) — Don't count out U.S. shoppers when it comes to shelling
out money for the winter holidays despite higher fuel prices and other
financial pressures.
The nation's largest retail trade group said Thursday that it expects
American consumers will collectively spend $1.01 trillion this November
and December, which would be 4.2% more than during the same months last
year.
The increase reflects more than seasonal good cheer, according to
economists. The National Retail Federation and other organizations that
have issued holiday forecasts said they expected higher consumer prices
to account for about half of the anticipated growth. Moreover, higher
income shoppers will fuel a lot of the spending, retail experts say.
“We all acknowledge households continue to navigate persistent inflation
and uneven confidence about the economy,” National Retail Federation
President and CEO Matthew Shay told reporters on Thursday. “But
throughout the year, consumers have repeatedly shown that holidays and
spending on loved ones are priorities. We’re confident that pattern is
going to continue through the 2026 winter holidays.”
Retailers rang up $972 billion in holiday sales last year, which was
3.1% more than the year before that, the trade group said.
At 4.2%, NRF's growth projection is above the actual gains from the last
20 years, which averaged 3.1% when excluding the outsized holiday
spending of pandemic-era 2020 and 2021, according to Mark Mathews, the
trade group's chief economist.
The forecast, which was not adjusted for inflation, is in line with most
other holiday predictions so far. The outlooks illustrate an ongoing
disconnect between the dismal consumer confidence that shows up in
monthly surveys and Americans' willingness to keep spending.
The U.S. war with Iran has driven up gasoline prices for drivers and
caused worries about all kinds of products getting more expensive as
high diesel prices make transporting goods costlier for retailers.
The average price for regular gasoline rose to $4.33 per gallon
Thursday, according to motor club AAA. Before the war began, gas cost
less than $3 a gallon.
Experts say such higher pump prices will continue to squeeze
lower-income shoppers, while higher-income shoppers buoyed by stock
market gains will keep splurging on discretionary purchases.
“We’ve seen disruption after disruption kind of knock people off kilter,
and then the consumer comes roaring back,” Bryan Eshelman, a partner and
managing director at AlixPartners, said.
Instead of pulling back altogether, consumers are changing their
shopping habits by trading down to lower-price brands and stores,
shopping earlier and relying more on credit cards and buy now pay later
plans, Eshelman said.
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 Holiday spending accounts for 19% of
the U.S. retail industry's annual sales, even more for some types of
retailers, according to NRF.
Economists look at the holiday results as a gauge for the state of
the consumer beyond the holidays. Consumer spending is monitored
closely because it drives about 70% of U.S. gross domestic product.
“It not only tells us about the current state of the consumer, (but)
it helps inform expectations for the year ahead as well," Mastercard
Economics Institute chief economist Michelle Meyer said. “It gives
us a lot of incredible insights into how consumers are doing from a
macro perspective.”
The institute, which tracks spending across all payment methods
including cash, forecast a 5.5% increase in holiday sales from Nov.
1 through Dec. 24 compared to last year.
Although Mastercard estimated that half of the growth would come
from higher prices instead of more sales, the institute still
expects healthy spending by shoppers because of a decent U.S. job
market, Meyer said.
“I guess they feel some sense of security because the jobless
numbers are so low," she said.
AlixPartners expects holiday sales numbers for October, November and
December to expand 4% to 7% over the same three months last year,
the firm said.
Adobe expects U.S. online sales to hit $275 billion this holiday
season, representing 6.7% growth. That growth is a tad smaller than
last year’s 6.8% increase from the previous year, the firm said.
NRF derives its holiday forecast through modeling with economic
indicators, including monthly retail sales, consumer spending,
disposable personal income, employment, wages and inflation. The
group's calculations exclude automobile dealers, gasoline stations
and restaurants.
The Labor Department’s snapshot of inflation released Wednesday
showed that U.S. inflation accelerated last month as gas prices went
back up again and many other goods and services became more
expensive. Higher prices are already starting to sap shopper
spending.
The latest retail sales report from the Commerce Department,
released Thursday, showed a solid 0.8% increase in September from
the month before, but gasoline purchases made up a big chunk of the
sales gain.
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