Retail sales in the U.S. are expected to grow between 6% and 8% this year, as Americans shift more of their spending to restaurants and trips and cope with sticker shock at the grocery store and gas station, the National Retail Federation said on Tuesday.
That would total between $4.86 trillion and $4.95 trillion in retail sales, the trade group said, with some of the sales gains coming from inflation-fueled prices. Those sales numbers exclude automobile dealers, gas and restaurants.
The NRF delivered its annual outlook as inflation and the Russian invasion of Ukraine send food and gas prices higher and raise questions about whether shoppers will pull back. Retailers are also starting to lap challenging comparisons. A year ago, Americans were receiving stimulus checks from the government and putting those extra dollars toward purchases.
The NRF’s forecast is significantly slower than the 14% annual growth rate in 2021, which was the highest in more than 20 years. Yet the group’s 2022 outlook is above the 10-year, pre-pandemic growth rate of 3.7%.
The trade group’s chief economist, Jack Kleinhenz, said at the NRF’s virtual event that he does not expect inflation to cool until 2023.
In recent weeks, retail leaders from Walmart, Target and Macy’s reported strong holiday-quarter earnings and said customers are still opening up their wallets rather than trading down to smaller packs, private labels and other budget-friendly alternatives. Yet all three companies said value is top of mind.
Walmart CFO Brett Biggs told CNBC in an interview last month that the company’s own studies show customers are paying attention to inflation. Macy’s CFO Adrian Mitchell said last week at an investor conference that the department store is thinking about how best to market itself to lower-income families who may feel squeezed by larger grocery bills.
Retail sales numbers bear that out, too. Sales rose 3.8% in January on a monthly basis, or 13% on a year-over-year basis, according to the Commerce Department. Inflation accounts for some of that increase, as it pushes up prices of food, fuel, cars and more.
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