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US consumers upped their spending at retailers in July, with retail sales beating expectations with a 0.7% rise month over month, according to Census Bureau data.
Year over year retail sales were up 3.2%, in line with the higher prices indicated by the July Consumer Price Index released last week.
Grocery store sales were up 0.8% from the previous month and 2.3% year over year, which aligns with the price hikes and strong earnings reported recently by CPG giants like The Coca-Cola Company and Mondelez. Food services and drinking places got a 1.4% bump from June, and had the highest year over year rise: 11.9%.
Online retail sales rose 1.9% from June and 10.3% year over year, likely boosted by Amazon’s “biggest ever” two-day Prime Day event in July, when US online sales rose 6.1%.
Sales at health and personal care stores notched a 0.7% sales increase from the previous month, while clothing and clothing accessories store sales rose 1% and sporting goods stores were up 1.5%. Month over month sales increased 0.8% at general merchandise stores and 0.9% at department stores.
- Forthcoming earnings from Walmart, Target, and Macy’s within the next week will provide a better glimpse into how retail giants are thinking about these consumer shopping behaviors.
Sales at stores selling bigger-ticket items dipped, with month over month numbers at furniture stores and electronics and appliance retailers dropping 1.8% and 1.3%, respectively.
Increased spending online and in stores was driven by summer sales, particularly for back-to-school season, Kayla Bruun, economic analyst at Morning Consult, said in emailed comments to Retail Brew. However, the months ahead could prove trickier for retailers.
“US consumers are facing stiffer headwinds in the coming months, as cooling wage growth, higher interest rates on rising credit balances, resumption of student loan repayments and the prospect of resurgent inflation for certain categories threaten to more tightly pinch household budgets,” she noted.