By Alice Seeley
According to data published on June 15 by the United States Department of Commerce and the National Retail Federation (NRF), U.S. retail sales fell by 0.3% in May, down from a revised 0.7% increase in April. This is the first time retail sales in the U.S. have decreased in five months.
The news is especially surprising since economists polled by the Wall Street Journal predicted an increase of 0.1% in May. However, this is still an 8.1% sales increase from May last year.
The decline in sales was caused by a major decline in automobile sales due to higher prices of cars and gas. Not including auto sales, retail sales increased by 0.5% last month. But excluding sales at gas stations, U.S. retail sales declined by 0.7% in May. This data shows how gas price inflation accounts for most Americans’ paycheck.
The data shows six of the 13 retail categories decreased last month. These categories included electronics, furniture, and e-commerce. Spending at grocery stores increased by 1.2%, but this likely reflects higher prices due to increased inflation rather than more consumer spending since the figures are not yet adjusted for inflation. Real spending data for May will be released later this month. In the report’s only service categories, restaurants rose by 0.7% in May.
“By some measures, consumers are the gloomiest they’ve ever been, but it doesn’t mean they will stop spending.” Lydia Boussour, the lead U.S. Economist at Oxford Economics, said. “With inflation reaching new heights and prices at the pump soaring, consumers will likely continue to reshuffle their spending priorities and allocate more of their budget toward services and pricier necessities such as gas, food, and shelter.”
Katherine Judge, an economist at CIBC Economic, agreed with Boussour, stating, “While it’s only one month, this is a sign that higher prices are starting to thwart consumer demand.”