Retail group sees slow sales well into 2009

NEW YORK (Reuters) - U.S. sales will stay sluggish through the holidays and well into next year, despite hopes consumers would get earlier relief from higher food and fuel prices, the National Retail Federation said on Thursday.

"We are very, very cautious about the rest of the year. We don't foresee a turnaround until at earliest the second half of next year and even that may be a bit optimistic," spokesman Scott Krugman said during a call with analysts.

Consumers who find their budgets pressured by rising prices and a housing slump "are clearly concentrating on the essentials," Krugman said.

The NRF will release a holiday forecast next month.

Overall retail sales are expected to slow, with total growth for 2008 at 3.5 percent compared with last year's 3.7 percent increase, Krugman said.

Families with children in kindergarten through 12th grade are forecast to spend an average of $594 on back-to-school purchases this year, up from $563 last year, bolstered by electronic purchases such as computers, music players and cell phones, Krugman said.

But college students are expected to spend $599 compared with $641 the previous year on back-to-school, hurt by a drop in apparel purchases and dorm and apartment furnishings.

(Reporting by Sarah Coffey; Editing by Andre Grenon)