In September, the pace of U.S. retail sales was almost unchanged from August. This is because rising rent and food prices have reduced money for other items.
Last month’s retail sales were flat, down from a revised. The Commerce Department reported Friday that August saw 0.4% growth. Retail sales declined 0.4% in July.
Retail sales increased by 0.3%, excluding sales at gas stations and automobile sales. Spending was up 0.1%, excluding gas sales
Even though the report highlighted the resilience of American consumers, it is not adjusted for inflation like many government reports. Even though grocery sales rose 0.4% due to rising food prices, they still saw a rise in sales.
You can see evidence that the Fed is attempting to cool down the economy, especially with large-ticket items. Last month saw a 0.4% drop in sales at auto dealers. Shoppers continued to cut back on electronics, furniture, and appliances. These categories were all successful during the initial part of the pandemic. The business at appliance and consumer electronics stores declined by 0.8%.
The sales at clothing stores increased by 0.5% while the business at department stores rose by 1.3%. This indicates a strong back-to-school season, but adjusted for inflation, spending was moderate. The restaurant business grew 0.5% while online sales climbed at the same rate.
GlobalData Retail’s managing director Neil Saunders said that the report “represents an economy that is tightening” and shoppers who are becoming more selective and cautious about what they purchase.
Nearly 70% of the U.S. economy is spent on consumer spending. Americans are resilient despite inflation at near-four-decade highs. However, rising rent and mortgage prices have increased anxiety. Overall spending has slowed down and has shifted more toward necessities like food while spending on electronics and furniture has declined.
Joel Rampoldt is a managing director of AlixPartners’ retail practice. He said, “Even though people look comfortable on paper, they don’t feel comfortable.”
Inflation in the United States increased in September. The rising cost of housing and other necessities puts more pressure on households. This almost eliminated pay gains and nearly guaranteed that the Federal Reserve would continue to raise interest rates aggressively.
The fastest increase in consumer prices since 1940 was 6.6%, which excludes volatile food and energy prices. Core prices rose 0.6% month-to-month for the second consecutive month, defying all expectations of a slowdown. This is a sign that Fed’s numerous rate hikes have not helped to ease inflation pressures. Core prices usually provide a better picture than the underlying trends in price.
The government reported Thursday that overall prices increased 8.2% in September, compared to a year ago, slightly less than in August.
Retailers are preparing for the holiday shopping season which averages 20% of the industry’s annual sales. This is a critical period. Already, inflation is changing shoppers’ shopping habits. They are more likely to shop at discount stores such as Walmart or dollar stores, and to switch to cheaper brands within their aisles.
Walmart and Target are just a few of the companies that have been pushing for deals earlier than others, while other lenders offer new financing options.
Conn’s HomePlus is a Texas furniture and mattress retailer that serves households at the bottom end of the economic spectrum. It has launched a new layaway program to help 20% to 25% who are not eligible for any other financing.
Chandra Holt, the CEO, stated that discretionary spending is less popular than ever. She said that sales of consumer electronics such as deluxe coffeemakers and other electronic gadgets have declined…
Numerous holiday forecasts by various research and consulting companies point to a slowdown in sales compared to last year. However, inflation-adjusted, it could be a decrease for retailers. AlixPartners projects holiday sales will rise anywhere from 4% to 7 percent from last year’s 16% increase. The National Retail Federation is the largest national retail trade organization. It has not released its holiday forecast.
Janet Barnes, 42, is a College Park resident. As prices rise, she says she is trading down and shopping at cheaper grocery stores. She now shops at Lidl, a discount chain that Lidl offers, and she claims she has saved about 40% on groceries instead of Wegmans or Whole Foods. She said that Nordstrom has been replaced by thrift stores.
Barnes said, “We are creatures based on habit.” “But it’s not a bad deal for us to see what’s going on — and try something else.