The National Retail Federation raised its full-year retail sales outlook Tuesday, saying sales gains in the first five months of the year were stronger than expected. The industry trade group now expects 2004 retail sales to rise 6% above 2003's total of $943.3 billion, which is up from original expectations for a 5% gain. In comparison, sales in 2003 rose 3.9%. (The NRF tracks sales at general merchandise stores, apparel stores, furniture and home furnishings stores, electronics and appliances stores, and sporting goods, hobby, book and music stores.) The NRF based its revised 2004 expectations on this year's 9% growth rate for sales from January to May vs. a 5% increase in the same period of 2003. Similarly, the government said in its May retail sales report that sales from January through May rose 8.4% to $1.6 trillion. Sales rose 9.9% in the first quarter, and second-quarter sales are projected to increase 7%, the NRF said, citing strong sales of electronics, appliances and apparel. "Rising employment is lifting wage and salary income, which will, in turn, increase total consumer income," said NRF Chief Economist Rosalind Wells. "Strengthening income is helping to keep consumers whole and is negating some effects of higher gasoline and food prices." While the NRF said concerns about inflation and interest rates have replaced what the previously lackluster employment data held over the market, it added that "rising interest rates and moderate inflation are the logical consequence of a rapidly growing economy and, at this point in time, are not alarming nor will they impinge on sustainable growth," Wells said. However, NRF noted that year-over-year sales comparisons will become challenging as 2004 continues, making sales gains more difficult to accomplish. As a result, it forecast third- and fourth-quarter gains of 4% to 4.5%.