Retail holiday sales increase for November and December will be 6.5 percent—down slightly from the actual retail holiday 2005 sales of 6.7 percent, said Ernst & Young LLP Consumer Products Practice in its annual holiday forecast.

“Sales will be stimulated by low unemployment, greater consumer confidence, declines in energy prices from the record highs earlier this year and recent gains in the bond and stock markets that could have a positive ‘wealth’ effect,” says Jay McIntosh, Americas director of Consumer Products for Ernst & Young LLP. “There are some concerns, such as the slowing of the U.S. economy and weakening of the housing market, that will temper spending, but we do not anticipate these will have a major impact on holiday spending.”

Consumer electronics is anticipated to be the hottest category this holiday season with many new variations on DVDs, iPods and accessories, mobile phones, digital cameras, photo printers, and thin-screened and high definition TVs, Ernst & Young said. The Internet will have another robust year with online holiday sales seeing a 20 percent increase over last season.

The firm also said that consumers can expect promotions to start earlier with many malls and retailers launching “Black Friday” (the day after Thanksgiving) at the stroke of midnight, versus the usual 5:00 a.m. opening.

The Ernst & Young Holiday Forecast is based on 15 years of data, including stock market performance, consumer confidence, unemployment rates and historical relationships between retailers, and their customers.

JCK