U.S. holiday sales are expected to see a modest rise compared to last year, data from the National Retail Federation (NRF) showed Thursday, as Americans turn more cautious during the all-important holiday season amid tightening household budgets.

The leading retail industry group said holiday sales, including e-commerce and non-store sales, to rise between 3% and 4% to $957.3 billion and $966.6 billion during November and December. This compares to a 5.4% rise seen last year and a 13.5% jump in 2021.

Shoppers are taking calculated steps before splurging this holiday season as high fuel and food prices wipe out their household budgets, which is starting to see an additional hit of student loan repayments.

The tight budgets have pushed Americans to go deal hunting and pick up products mainly during heavy discounting days like Black Friday and Thanksgiving.

NRF's gloomy expectations for the two months echo a similar forecast from Deloitte that sees holiday sales in the United States rise at their slowest pace in five years as consumers purchase items and prioritize necessary products needed for day-to-day requirements.

However, in the last couple of years, the so-called holiday shopping season has been starting as early as October as many retailers offer deals and discounts throughout the month until December to attract shoppers, which has likely dented sales for the November-December period.

Amazon.com hosted a second Prime Day on Oct. 10-11, Best Buy offered a 48-hour flash sale and Target has a "Deal of the Day" program from October to bring in customers who looked to pull forward purchases to make use of the steeper discounts.