Holiday Retail Sales, Adjust for Inflation

The Times reported today that the National Retail Federation (NRF) predicts a 5 percent increase in holiday sales for 2006. It notes that this is a lower pace than the 6 percent increases seen the prior two years. It would have been helpful to adjust this prediction for inflation.

The CPI for commodities, excluding food, energy, and new and used trucks, which most closely corresponds to the items sold in retail stores, is running about 0.7 percent above its year ago level. It was essentially flat on a year over year basis the prior two years. This means that the NRF federation prediction implies a drop of about 1.7 percentage points in real terms from year over year growth in the prior two years.

--Dean Baker

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