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Consumers Are Still Shopping Despite Inflation

Core retail sales as calculated by the National Retail Federation (NRF) rose in July even as overall sales reported by the Census Bureau remained flat on a monthly basis.Both calculations showed strong year-over-year gains as consumers kept shopping despite high inflation.

Matthew Shay
Matthew Shay

“Retail sales grew in July, supported by declines in prices at the gas pump and moderately lower inflation,” said NRF President and CEO Matthew Shay. “Consumers are adapting to higher prices by prioritizing essentials like food and back-to-school items, and retailers are working hard to absorb the impact of higher costs and help customers stretch their hard-earned dollars. However, policy measures like removing China tariffs, enacting smart immigration reform, and investing in supply chain resiliency are needed to relieve inflationary pressure and lower costs for American families.”

Jack Kleinhenz
Jack Kleinhenz

“Retail sales were up considerably compared with a year ago even though consumers are more discerning in this economic environment,” said NRF Chief Economist Jack Kleinhenz. “Consumer spending was an encouraging signal as the economy kicked off the third quarter. Nonetheless, inflation is still disturbingly high even as it eases and is the most important challenge for consumers and retailers. The future path of inflation remains a key factor for the economy and monetary policy as the Federal Reserve works to bring price increases under control.”

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The US Census Bureau said that overall retail sales in July were unchanged from June but up 10.3 percent year-over-year. That compared with increases of 0.8 percent month-over-month and 8.5 percent year-over-year in June. On a three-month moving average, sales were up 9.2 percent year-over-year.

NRF’s calculation of retail sales—which excludes automobile dealers, gasoline stations, and restaurants to focus on core retail—showed July was up 0.8 percent from June and up 7.1 percent unadjusted year-over-year. In June, sales were up 0.6 percent month-over-month and up 6 percent year-over-year.

NRF’s numbers were up 7 percent unadjusted year-over-year on a three-month moving average as of July. Sales were up 6 percent year-over-year for the first seven months of the year, keeping results on track with NRF’s forecast that 2022 retail sales will grow between 6 percent and 8 percent over 2021.

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July sales were up in all but three retail categories on a yearly basis, led by online sales, building material stores, and grocery stores, and increased in all but two categories on a monthly basis. Specifics from key sectors include:

  • Online and other non-store sales were up 2.7 percent month-over-month seasonally adjusted and up 18.1 percent unadjusted year-over-year.
  • Building materials and garden supply stores were up 1.5 percent month-over-month seasonally adjusted and up 6.2 percent unadjusted year-over-year.
  • Grocery and beverage stores were up 0.2 percent month-over-month seasonally adjusted and up 7.7 percent unadjusted year-over-year.
  • Sporting goods stores were up 0.1 percent month-over-month seasonally adjusted and up 3 percent unadjusted year-over-year.
  • Health and personal care stores were up 0.4 percent month-over-month seasonally adjusted and up 1.5 percent unadjusted year-over-year.
  • Clothing and clothing accessory stores were down 0.6 percent month-over-month seasonally adjusted but up 0.2 percent unadjusted year-over-year.
  • General merchandise stores were down 0.7 percent month-over-month seasonally adjusted and down 0.1 percent unadjusted year-over-year.
  • Furniture and home furnishings stores were up 0.2 percent month-over-month seasonally adjusted but down 0.3 percent unadjusted year-over-year.
  • Electronics and appliance stores were up 0.4 percent month-over-month seasonally adjusted but down 11.3 percent unadjusted year-over-year.

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