(Adds analyst comments)
By Sruthi Ramakrishnan and Subrat Patnaik
Jan 15 (Reuters) - Retail sales in the United States increased by a less-than-expected 3 percent to $626.1 billion in the holiday shopping season, hurt by unseasonably warm weather and lower prices, the National Retail Federation said on Friday.
The NRF, the world's largest retail trade association, had expected sales to rise 3.7 percent in the November-December period compared with a year earlier.
"Weather, inventory challenges, advances in consumer technology and the deep discounts that started earlier in the season and that have carried into January presented stiff headwinds as retailers competed with one another and their own bottom line," NRF Chief Executive Matthew Shay said.
The U.S. Commerce Department reported on Friday an unexpected drop in both overall and core retail sales for December. The latter excludes automobiles, gasoline, building materials and food services.
A host of retailers have blamed warmer-than-usual weather for poor holiday sales and have reduced earnings estimates, including department store operator Macy's Inc.
Weakness in core retail sales has centered on department and clothing stores, both of which have had a soft year, and food and beverage stores, which are being hurt by weak pricing, Steve Blitz, chief economist at research firm ITG, said in a note.
Reuters reported in December that retailers were struggling to meet even modest sales forecasts for the holiday season after "Super Saturday," one of the biggest shopping days after Black Friday, failed to live up to expectations.
Discounting in core retail categories was more widespread and deeper this year, which probably helped to stimulate some spending activity but did not result in huge volume increases and dampened overall sales growth, Neil Saunders, chief executive of research firm Conlumino, told Reuters.
A relatively weak product line-up in electronics also contributed to the lower than expected sales growth, he said.
Online sales were a bright spot, however, jumping 9 percent to $105 billion, NRF estimated. That was above the association's forecast of 6-8 percent growth.
Nearly a third of the purchases online in the period were made using mobile devices, according to a report by IBM Watson Trend. The report estimated that total online sales rose 13.6 percent in the period.
Many lower-income families are reining in spending due to higher rents, taxes and healthcare costs, analysts and company executives have said.
"Median income growth for most Americans was flat to negative ... If income is down for 80 percent of the households, you're not going to have a great Christmas," Customer Growth Partners LLC President Craig Johnson told Reuters.
(Reporting by Sruthi Ramakrishnan and Subrat Patnaik in Bengaluru; additional reporting by Ramkumar Iyer and Abhijith G; Editing by Savio D'Souza and Ted Kerr)