NRF Cautious on Year's Sales

NEW YORK CITY-A National Retail Federation report says that retail sales this year will increase by 3.5%, a major drop from the 6.4% increase posted in 2004. The report, which tracks GAFS sales (general merchandise, apparel, furniture and home furnishings, electronics and appliances and sporting goods), was released yesterday at the organization’s annual Convention & Expo here at the Jacob K. Javits Convention Center.

One reason for the smaller increase is due to a tough comparison to last year’s figures. For example, GAFS sales were up 9.9% during 2004′s first quarter, leading the NRF to predict that sales in this year’s Q1 will only rise 3.7%.

Other factors will also decrease consumer spending. “This year, consumers will be under increased financial pressure due to higher energy costs and slow wage growth,” says Rosalind Wells, the NRF’s chief economist. Consumers will also have a lack of tax cuts and low interest rates that they’ve had in the past to help bolster sales, she says.