NEW YORK (AP) — The largest retail trade group in the United States said Tuesday that it expects consumers to spend more during the upcoming holiday shopping season but the growth in sales to be slower than last year due to concerns over persistent inflation and prices.

The National Retail Federation said its 2024 forecast indicates that shoppers will make $979.5 billion to $989 billion worth of purchases in November and December, which would represent a 2.5%-3.5% increase over the same two-month period a year ago.

However, the $955.6 billion spent during the 2023 holiday shopping season was 3.9% more than in 2022.

This year's predicted pace is consistent with the average increase of 3.6% from 2010 to 2019. During the coronavirus pandemic, Americans ramped up their spending. Holiday season sales rose 9% in 2020 from the year before, and they soared 12.4% in 2021, according to the National Retail Federation.

The trade group makes its calculations based on government figures. The numbers exclude sales at automobile dealers, gasoline stations and restaurants.

The forecast considers economic indicators such as employment, wages, consumer confidence, disposable income, consumer credit, previous retail sales and weather.

“Interest rates are still a little higher than they were in recent memory,” National Retail Federation CEO and President Matt Shay said during a call with reporters. "Consumers do have those interest rates and the lingering inflation on their minds. So we expect that consumers will continue to be more price-conscious and pragmatic in their spending decisions.”

The retail federation issued its look-ahead as the data shows U.S. consumers continuing to spend, powered by sturdy hiring, low unemployment and healthy household finances. Moreover, gas prices are coming down, leaving a little extra money for shoppers to spend on gifts. The national average price for a gallon of unleaded gasoline was $3.2 on Tuesday; a year ago, it was $3.60, according to auto club AAA.

But there are plenty of challenges this season, including a presidential election that could create a big distraction from shopping in November. NRF officials said it was nearly impossible to measure the election's impact on current or future spending.

With Thanksgiving falling on Nov. 28, there also will be six fewer days between the holiday and Christmas Day compared to last year. Other factors that could hurt holiday sales: the economic impact of hurricanes Helene and Milton, NRF officials said.

Walmart, the nation’s largest retailer, plans to advertise savings on Thanksgiving meal products starting Oct. 14, about two weeks earlier than last year.

NRF’s forecast was in line with the predictions of other analysts, which also point to a more restrained mood among shoppers.

Management consulting firm Bain & Co. said it anticipated November and December retail sales to rise by 3% as opposed to the 4.2% growth seen last year. AlixPartners, another consulting firm, expects sales for October through December to be up anywhere from 2% to 5%, lower than last year’s 6% increase. Consulting and research firm Customer Growth Partners predicted sales to grow 4% during the holiday period, just slightly below its figure from last year.

Meanwhile, Adobe Analytics predicts online sales will surge 8.9%, marking the highest spending pace since 2021 when it was 8.6%. A year ago, online sales were up 4.9%, compared with the previous year. Vivek Pandya, lead analyst, Adobe Digital Insights, noted that shoppers’ bigger interest in discounts will drive spending. Discounts should average about 30%, the same as a year ago, he said.

While the inflation rate is coming down, it’s still a big pocketbook issue for shoppers as many food items still cost considerably more than they did a few years ago.

James Zahn, editor-in-chief of industry trade publication The Toy Book, thinks shoppers are even more price-conscious than they were last year when it comes to buying toys. Toys under $20 are resonating with parents, he said.

Kohl’s executives said last week that shoppers, particularly those in lower income brackets, will feel more squeezed than a year ago.

Christie Raymond, Kohl’s chief marketing officer, said the cumulative impact of high prices on food and other essentials is eating into people's savings. As part of its holiday strategy, Kohl’s plans to be aggressive with offering discounts. As for the presidential race, Kohl’s executives said they were not sure if consumers will hold back their buying ahead of the Nov. 5 election but it’s something they are monitoring.

“We’re just trying to follow the consumer, and we know that they’re going to feel squeezed once that Thanksgiving time frame hit,” Raymond told reporters.