By Neil J Kanatt

(Reuters) -U.S. holiday sales growth is expected to temper this year, a Mastercard forecast showed on Thursday, as consumers seek discounts and promotions amid inflation and broader macroeconomic uncertainty.

The Mastercard Economics Institute report forecasts retail sales to rise 3.6% between November 1 and December 24 this year, compared to a 4.1% growth in the same period last year.

WHY IT'S IMPORTANT

Holiday shopping is a key sales driver for retailers, and will be even more critical this year as the Trump administration's shifting trade policy increases costs of goods and constrains demand.

Mastercard's report also said the shortened period between Thanksgiving and Christmas this year, and the earlier introduction of promotions could boost online sales at the beginning of December.

KEY QUOTES

"The big difference from last year is not the total number in terms of spending, but the composition of spending," said Michelle Meyer, chief economist at Mastercard Economics Institute.

"This year will certainly be one where pricing matters more, in a world where tariffs have kicked in." 

BY THE NUMBERS

Online sales are expected to jump 7.9% this holiday season, compared to an 8.6% rise last year, according to the Mastercard report.

In-store sales are projected to grow 2.3%. It rose 2.8% in the 2024 holiday season.

Mastercard's forecast is based on SpendingPulse insights, which measure in-store and online retail sales across all forms of payment, excluding automotive sales.

CONTEXT

The Mastercard projections echo recent reports from Salesforce, Deloitte and PwC about a subdued holiday season.

Retailers have issued mixed forecasts in recent weeks, heading into the holiday season. Target and Best Buy have maintained their annual forecasts, while Walmart and Macy's have raised theirs. Toymaker Mattel, however, cut its forecast.