Holiday sales in the United States are estimated to grow at their slowest pace in five years, according to a report released on Wednesday, as dwindling household savings and worries over the economy prompt consumers to spend judiciously.

Sales across physical stores and online channels are expected to rise by 3.5% to 4.6% between November and January, for a total of $1.54 trillion to $1.56 trillion, according to Deloitte.

That compares to a 7.6% increase in 2022, Deloitte said, when high inflation drove up prices for everything from Christmas cardigans and toys to home appliances.

Last month, retail bellwether Walmart said there was reason to be cautious about the consumer in the back half of the year, owing to the restart of student loans, gas prices creeping back up again and pressure from high interest rates - factors the company said could pressure its profit margins.

Other earnings reports from retailers in August also tempered expectations of a robust holiday season, with department store major Macy's warning of curtailed consumer spending.

Pandemic-era savings are eroding fast too. U.S. excess savings fell to around $500 billion from roughly $2.1 trillion in August 2021, according to estimates from the San Francisco Federal Reserve. The Oct. 1 resumption of student loan payments for millions of Americans is expected to further strain budgets.

Deloitte's estimates are based on its projections for inflation of 3.6% for the year, compared with 7.1% last year, it said.

However, it's not all doom and gloom for holiday retail - online shopping is expected to be a bright spot this season, with growth between 10.3% and 12.8% seen outpacing trends over the past two years, according to Deloitte.

U.S. retail sales has also held up over the summer, rising a better-than-expected 0.7% in July thanks to income growth and increased usage of credit cards, according to the U.S. Commerce Department.

A slowdown in the job market could limit holiday spending though, according to Daniel Bachman, Deloitte's U.S. economic forecaster.

D.A. Davidson analyst Michael Baker told Reuters that back-to-school trends have led the direction of holiday sales in 23 of the last 29 years, and Walmart's CEO Doug McMillon said at a conference on Tuesday that he expects the holiday season "to (be) pretty good" following demand for back-to-school merchandise in July.

Companies including Target and American Eagle Outfitters also have said that shoppers snapped up back-to-school merchandise.

(Reporting by Deborah Sophia in Bengaluru; Additional reporting by Siddharth Cavale in New York; Editing by Pooja Desai and Devika Syamnath)