Although the nation's shoppers will spend 8% more this Christmas season than they did last year, the increase in yuletide buying will not be inflationary, according to a First Union Corp. report released last week.

In its annual holiday season report, the Charlotte, N.C.-based bank holding company said that increased competition will bring prices down from last year's levels.

"An 8% gain would be good news for retailers this year, but it's not quite as high as many of them are hoping for," said First Union economist Mark Vitner.

Because of this, Vitner added, "some store shelves may be overstocked, so price cuts may be in order."

The economist said the growing strength of large discount outlets -- particularly what he calls "category-killer stores," such as computer, music, books, toy, and pet superstores -- is causing intense competition among vendors.

The banking corporation estimated that retail prices for computers, videocassette recorders, and compact disc players are already 5% lower than last year. It said the price of toys is up less than 1%.

First Union noted that because of the timing of Thanksgiving, this year's holiday shopping season is 30 days, one day longer than last year's.

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