What: The NRF's chief economist contends that services costs, which rose up to 33% over five years, are squeezing retail budgets even as goods prices rise more slowly.

Why it is important: It reframes the affordability debate around share of wallet, as retailers now compete for what remains of household budgets after housing, insurance and transport, a pressure already visible in weakening US discretionary spending and Ikea's housing-driven price cuts.

In a 16 September 2026 commentary, NRF chief economist Mark Mathews argues that rising prices for essential services are squeezing household spending on retail goods, even when goods prices rise more slowly. Services account for roughly two-thirds of US personal consumption expenditure, reflecting both changing spending patterns and higher prices.

Over three years, prices for financial services and insurance rose 21.1%, housing and utilities 13.3% and transport services 12.4%. Over five years, housing and utilities climbed 30% and financial services and insurance 33%. By contrast, the NRF estimates a basket of goods costing $1 in the 1990s would cost about $1.28 today, while durable goods such as furniture, electronics and appliances costing $100 in 1996 would cost about $71.

Mathews says competition and easy price comparison limit retailers' ability to raise prices, with the NRF citing an average net margin of about 1.3% for publicly traded US grocers, against 18.5% for pharmaceutical companies and 29.9% for software companies. As the retail industry's trade body, the NRF presents one perspective on the affordability debate.

In the UK, August 2026 ONS figures show annual CPI inflation of 3.4% for services and 2.7% for goods, with housing and household services up 4.9%.

IADS Notes: The NRF's argument that household budgets are being squeezed from outside retail is reflected in recent spending data. In the US, rising gasoline and energy costs pushed Visa's spending momentum index below expansion territory in July, with discretionary categories such as fashion, department stores and luxury falling to their lowest level since February 2025 (Visa, August 2026), although retail sales rebounded 1.2% in August as import prices rose 7.0% year on year, the sharpest annual increase since 2022 (Reuters, September 2026). Housing, one of the services categories singled out by the NRF, is already reshaping goods demand in Europe, where Ikea committed €1.2 billion to price cuts after surging housing costs curbed spending on furniture and homeware (Reuters, September 2026). In the UK, the British Retail Consortium's shop price index rose to 1.5% in August, its highest reading since February 2024, as energy, input and memory-chip costs fed through to food and electronics prices (Reuters, September 2026). The question of who is blamed for prices also carries a regulatory dimension, as retailers' use of AI-driven personalised pricing has drawn legislative scrutiny in New York and an NRF lawsuit against the state's disclosure law (Forbes, January 2026).

Are retailers being unfairly blamed for higher prices?