NEW YORK (AP) – The pace of sales at U.S. retailers was flat in September from August as soaring food and rent prices hurt money available for other things.
Retail sales were flat last month, down from a revised level. The Commerce Department reported on Friday that it grew 0.4% in August. Retail sales fell 0.4% in July.
Excluding sales of cars and at gas stations, retail sales increased by 0.3%. Excluding gas sales, spending rose 0.1%
While the report shows the resilience of the US consumer, the figures are not adjusted for inflation unlike many other government reports. In fact, sales at grocery stores rose 0.4 percent on the back of rising food prices.
Evidence suggests that the Fed’s fight to cool the economy may be on hold, especially with big-ticket items. Sales at auto dealerships fell 0.4% last month, and shoppers continue to return to appliances, electronics and furniture, all items that have performed well in the past month. the beginning of the pandemic. Business activity at electronics and consumer appliance stores fell 0.8%.
Sales at clothing stores rose 0.5%, while business at department stores rose 1.3%, analysts said. Business at restaurants increased 0.5%, while online sales also increased at a similar rate.
Neil Saunders, chief executive officer of GlobalData Retail said the report was “representative of a tightening economy and a shopper becoming more discerning and cautious about what they buy”.
Consumer spending accounts for nearly 70% of U.S. economic activity, and Americans are largely resilient even as inflation nears a four-decade high. However, skyrocketing prices for everything from mortgages to rent have raised anxiety levels. Overall, spending has slowed and increasingly shifted towards necessities like food, while spending on electronics, furniture, new clothes and other non-essentials has dwindled.
Joel Rampoldt, managing director of retail at AlixPartners, said: “Even when people are employed and on paper seem reasonably comfortable, they don’t feel comfortable and they are very worried about it. what will happen next”.
Inflation in the United States increased rapidly in September, with the cost of housing and other necessities putting more pressure on households, dodging wage increases and virtually guaranteeing that the Federal Reserve will continue to raise interest rates sharply. strong.
Consumer prices, excluding volatile food and energy costs, rose 6.6% in September from a year ago – the fastest pace in four decades. And on a monthly basis, core prices rose 0.6% for the second time in a row, defying expectations of a deceleration and signaling that multiple Fed rate hikes have yet to ease inflationary pressures. The underlying price often provides a better picture of the underlying price trend.
Overall prices rose 8.2% in September from a year earlier, down slightly from August, the government said on Thursday in its monthly inflation report.
This is a critical period for retailers as they prepare for the holiday shopping season, which averages 20% of the industry’s annual sales. Inflation is changing shoppers’ habits, causing them to turn to cheaper stores like Walmart and dollar stores and in the aisles, switch to cheaper brands.
Walmart and Target are others that are driving deals earlier while others are providing new financing to customers.
Conn’s HomePlus, a Texas mattress and furniture store chain that caters to households at the lower end of the scale, has launched a new layoff program that serves 20% to 25% of applicants. chain’s singles are not eligible to receive other financing.
“The discretionary spending power of (buyers) is more limited than in the past,” said CEO Chandra Holt. Sales of things like other luxury coffee machines have been declining, she said. .
A flurry of holiday forecasts from various research and consulting firms indicate that sales have slowed year-over-year, but adjusted for inflation, retailers can actually see a decrease. AlixPartners predicts holiday sales will grow between 4% and 7% year over year, or 16%, according to its calculations. The National Retail Federation, the nation’s largest retail trade group, has not released its holiday forecast.
Janet Barnes, 42, a resident of College Park, Maryland, says she’s been trading down and going to cheaper groceries when prices skyrocket. Instead of Wegmans or Whole Foods, she now joins discount chain Lidl and says she saves about 40% on groceries. Thrift store has replaced Nordstromshe speaks.
“We are creatures of habit,” Barnes said. “But it’s not a bad thing to see what else is going on – and test something else.”
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Writer Chris Rugaber of AP Economics in Washington contributed to this report.
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