Retail sales rebound in August after July drop

US retail sales jumped 1.2% to $773.9 billion in August, the Commerce Department reported this week, a higher-than-expected rebound from a 0.5% decline in July.

Most retail segments saw sales upticks, with gas stations helping to pull up the overall gain, climbing 3.1% month-over-month amid continually elevated gas prices.

Nonstore retailers, made up largely by e-commerce sales, secured a 2.6% sales increase.

Other sales gains included miscellaneous store retailers (1.9%), electronics and appliance stores (1.6%), restaurants and bars (1.2%), sporting goods, hobby, and book stores (1.2%), furniture and home stores (0.9%), and health and personal care stores (0.9%). Clothing and accessories stores sales rose 0.7%, while sales at food and beverage stores rose 0.4%, with grocery stores up 0.5%.

Building material and garden equipment stores were the only main category that experienced declining sales in August, down 0.2%, aligning with The Home Depot CFO Richard McPhail’s comments last month that the retailer’s customers are “hesitant” to spend. Sales at department stores, a segment of general merchandise stores (which themselves got a 0.7% sales increase), dropped 0.8% from the previous month.

The surge in retail sales comes after the Consumer Price Index climbed up 0.4% in August, the Bureau of Labor Statistics reported last week, also a higher-than-expected result.

Heather Long, chief economist at Navy Federal Credit Union, noted in an email to Retail Brew that higher prices could be driving the boost to online retail sales, as consumers seek deals, while a rise at restaurants and book and hobby stores shows consumers are seeking out “little splurges” (a behavior also driving consumer interest in mini beauty products, Retail Brew previously reported.) But a spending shift is looming, Long said.

“A consumer spending slowdown is likely later this year and into early 2027 as middle-income and lower-income households feel the pinch from higher gas and grocery prices,” she said. “Real incomes are flat or declining for many and they will have to cut back on something. But for now, consumption remains robust.”