Despite inflation and worries of a recession, retail sales rose in July. The National Retail Federation (NRF) says that core retail sales rose even as overall sales reported by the Census Bureau remained flat on a monthly basis. Calculations from both groups showed strong year-over-year gains as consumers kept shopping despite high inflation.
“Retail sales grew in July, supported by declines in prices at the gas pump and moderately lower inflation,” NRF President/CEO Matthew Shay said in a release. “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.”
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% from June and up 7.1% unadjusted year-over-year. In June, sales were up 0.6% month-over-month and up 6% year-over-year.
NRF says 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.
Clothing and clothing accessory stores were down 0.6% month-over-month seasonally adjusted, but up 0.2% unadjusted year-over-year. General merchandise stores were down 0.7% month over month seasonally adjusted, and down 0.1% unadjusted year-over-year.
“Retail sales were up considerably compared with a year ago even though consumers are more discerning in this economic environment,” NRF Chief Economist Jack Kleinhenz explained. “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.”
Meanwhile, the U.S. Census Bureau said overall retail sales in July were unchanged from June but up 10.3% year-over-year. That compared with increases of 0.8% month over month and 8.5% year-over-year in June. On a three-month moving average, sales were up 9.2% year over year.
NRF’s numbers were up 7% unadjusted year-over-year on a three-month moving average as of July. Sales were up 6% 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% and 8% over 2021.