Consumers’ willingness to spend overcame inflation in August as more jobs, higher wages and falling gas prices helped ease some of the pressure of high prices.
Core retail sales in August inched up 0.1% from July and rose 8% year-over-over, according to the National Retail Federation, whose calculation excludes automobile dealers, gasoline stations and restaurants. In July, sales were up 0.5% month over month and up 7.2% year over year.
Sales were up 7.5% year over year for the first eight months of the year, keeping results on track with NRF’s forecast, which predicted that 2022 retail sales will grow between 6% and 8% over 2021.
“Household spending remains steady even as costs continue to rise,” said NRF chief economist Jack Kleinhenz. “Consumers continuing to spend more each month points to the benefits of strong job and wage growth and their use of pandemic savings to help handle persistent elevated prices.”
Kleinhenz, warned, that while consumers are showing their toughness, they have limited options if prices do not begin to soften.
“This retail sales report comes amid mixed signals from the broader economy that show the headwinds against the consumer are strengthening,” he said.
The U.S. Census Bureau reported that overall sales rose 0.3% in August amid a surge in auto spending and dining out. August sales excluding auto and gas grew about 8% versus 2021.
“August sales demonstrate that the consumer continues to shop,” commented David Silverman, senior director, Fitch. “While inflation has dominated the conversation about the consumer and indeed represents the bulk of this increase, consumers’ willingness to continue spending after several years of strong growth supports a constructive view on consumer health.”
Silverman added that high inventory levels should lead to elevated promotional activity in categories such as apparel and home through the remainder of the year, “depressing company margins although potentially providing some modest inflationary relief to customers willing to bargain hunt in these categories."
August sales increased in all but four categories on a monthly basis and were up in all but one category (electronics and appliance stores )on a yearly basis, led by building material stores, online sales and grocery stores.
Specifics from key sectors for August month-over-month sales are below.
• Building materials and garden supply stores were up 1.1%.
• Online and other non-store sales were down 0.7% (but up 12.3% year over year).
• Grocery and beverage stores were up 0.5%.
• Sporting goods stores were up 0.5%.
• Clothing and clothing accessory stores were up 0.4%
• Health and personal care stores were down 0.6%.
• General merchandise stores were up 0.5%.
• Furniture and home furnishings stores were down 1.3%.
• Electronics and appliance stores were down 0.1%.