Key Takeaways:
- NRF expects holiday sales growth to accelerate to its fastest pace in several years despite inflation and higher gas prices.
- Rising prices account for part of the projected gain, according to NRF Chief Economist Mark Mathews.
- Higher-income shoppers will drive much of the growth.
The National Retail Federation (NRF) expects holiday sales growth to accelerate this year, forecasting a 4.2% increase over 2025 to $1.013 trillion during November and December. Last year, holiday sales rose 3.1% to $972 billion.
If realized, this year’s growth would be the fastest since 2021, when holiday sales rose 12.6%, according to NRF’s historical data. Holiday sales have averaged about 19% of total annual retail sales over the past five years.
NRF President and CEO Matthew Shay said consumers have shown resilience throughout 2026, and NRF expects that strength to carry into the holiday period even as households navigate persistent inflation and uneven confidence about the economy.
“Throughout the year, consumers have repeatedly shown that holidays and spending on loved ones are priorities, and that’s actually been true for many years,” Shay said on a press call Thursday.
NRF defines the holiday season as Nov. 1 through Dec. 31. Its forecast excludes automobile dealers, gasoline stations and restaurants to focus on core retail, and draws on indicators including consumer spending, disposable personal income, employment, wages, inflation, and previous monthly retail sales.
Inflation Adds to Sales Growth
NRF produced the forecast with Oxford Economics. NRF Chief Economist and Executive Director of Research Mark Mathews said inflation is contributing to nominal sales growth. NRF expects core goods inflation, as measured by the PCE price index, to average 2.5% in 2026, up from 1.6% in 2025.
Higher diesel prices are increasing shipping costs, and surging memory chip prices are putting upward pressure on important gifting categories, particularly electronics, Mathews said.
“Through the first eight months of the year, excess tax refunds have actually offset higher gas prices, but that effect has worn off,” Mathews said.
If gas prices stay high, he expects a larger impact on lower-income households. Still, NRF expects goods prices to run below headline inflation as retailers respond to price-conscious consumers. Mathews said nearly half of the forecast 4.2% growth will come from real consumer spending growth.
NRF’s September retail sales data, released last week, showed 12 consecutive months of growth, and Mathews said he expects some of that momentum to carry into November and December.
A Different K-Shape
NRF’s data continues to show K-shaped spending, though Mathews said the pattern looks different from last year. In 2025, spending fell year over year for most lower-income groups. This year, spending is up for most groups, which he said accounts for some of the greater strength in retail sales.
Spending growth remains higher among upper-income households. In some sectors, the top 10% of spenders account for as much as 70% of total sales, Mathews said.
“I think for the higher end of the numbers to be delivered for the holiday season, we would have to expect higher income consumers to actually step in and spend more, maybe shift some of that spending out of services into goods,” Mathews said.
Wage growth has come under pressure from higher inflation this year, Mathews said. However, revised data raised real disposable income growth, primarily due to higher interest income and lower core PCE inflation. He said those gains likely skew toward higher-income households.
Higher gas and food prices weigh more heavily on moderate-income households, while rising financial wealth continues to support spending by higher-income households. Wealth effects are strongest outside core retail, in areas such as automobiles, travel and hospitality, but Mathews expects retail categories to benefit as well.
“We expect consumers to remain deliberate and value-conscious in their choices, even as they prioritize gifts and celebrations,” Mathews said.
Consumer confidence readings remain weak, Mathews said.
“Our research finds that confidence is a pretty poor predictor of actual spending,” Mathews said. “Real disposable income, labor market health, and household wealth are much more important drivers of our forecast.”
Retailers Expected to Absorb Some Freight Costs
Asked how retailers will manage higher freight costs, Mathews said heavy competition and value-conscious shoppers make it difficult for any retailer to charge more than its rivals. As with tariffs, he expects retailers to absorb some of the added costs.
“This is an industry that survives on providing lower prices to consumers and potentially eating some of those costs,” Mathews said.
AI Shopping Expected to Grow
Shay said NRF saw a spike last year in consumers using AI during their holiday shopping, and he expects AI tools and agents to play a bigger role this season. NRF will release results from its Thanksgiving weekend consumer survey in about a month and also plans to publish a report on returns in the retail industry.
“I think it’s going to be even more prevalent this year than last,” Shay said.
Seasonal Hiring Holds Steady
NRF expects retailers to hire between 325,000 and 375,000 seasonal workers, in line with last year’s estimated 356,000 seasonal jobs. Shay said retailers continue to operate in a “low-hire, low-fire” labor market.
“Retailers will remain careful, but responsive in terms of aligning staffing and other resources with consumer demand across stores, distribution and fulfillment centers, and other operations,” Shay said.
NRF cited higher gas prices, persistent inflation, higher interest rates, and elevated consumer debt as reasons for the measured approach.
“Retailers are prepared to meet that demand with competitive prices, value, and choices for every budget,” Shay said in a statement.
