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For the first time since March, US retail spending dropped in October, dipping 0.1% from September to $705 billion, according to the Commerce Department, but still beat economists’ estimates.
The Labor Department’s October Consumer Price Index released on Tuesday indicated consumer prices remained flat month over month for the first time in more than a year.
Year over year retail sales rose 2.5% from October 2022. Sales at health and personal care stores saw the largest bump both monthly (1.1%) and annually (9.6%). Grocery sales were up 0.7% from September and 0.9% year over year, while foodservice and drinking places saw a 0.3% monthly rise and 8.6% YoY increase. Online sales got a 0.2% boost, up 7.6% year over year. Electronics and appliance stores also saw a 0.6% monthly sales increase, while clothing and clothing accessories store sales were flat month over month.
Furniture retailers saw the largest dip, down 2% from September and -11.8% from last year. General merchandise stores’ sales dropped 0.2% month over month, and department store sales fell 1.2%.
The dip in spending came as inflation cools but prices remain elevated, continuing to impact consumers’ spending as they put off buying larger ticket items, head to discount stores, and generally shop less, Morning Consult retail and e-commerce analyst Claire Tassin told Retail Brew via email. High interest rates on homes and cars have also been cutting consumers’ retail spending, Morning Consult senior economist Kayla Bruun noted in the email.
“Despite slower inflation, US consumers remain budget-conscious, and continued prioritization of services purchases may be edging out some retailers’ share of wallet,” she said.
Target’s third quarter earnings reported this week reflected the continued consumer spending pullback. The retailer’s comparable sales were down 4.9% year over year. CEO Brian Cornell noted that shoppers have been putting off cold weather purchases, like sweatshirts and denim, from late summer until the weather gets colder, and noted that top-line trends have “been tougher than expected.”