Retail sales fell 0.3% in May due to record high fuel prices, four decades of high inflation, rising interest rates and weakening consumer confidence in the US.
A report from the Ministry of Commerce on Wednesday indicated that high gas prices are affecting sales in other countries. Excluding vehicle and gas station sales, retail sales fell 0.4% month on month.
The results were worse than expected and showed a sharp rebound from the previous month. Economists expect retail sales to rise 0.1% from April. The March-April figure was revised to 0.7 percent from the initial report of 0.9 percent that showed sales were weaker than expected.
The numbers really flatten inflation because they don’t adjust for price changes. Consumer prices rose 8.6 percent year-on-year in May, reaching the highest level since 1981. Prices increased by one percent on a monthly basis. Excluding food and energy, prices rose 0.6 percent. Adjusted for inflation, non-fuel retail sales are likely to fall by about one percent.
Sales at car dealerships fell 4 percent in May, down 4.9 percent from a year ago. This shows that automakers are still facing supply chain challenges, particularly a shortage of chips. Many analysts believe these problems will begin to subside at this time.
Excluding car sales, sales including gas stations increased by 0.5%. This mainly reflects the 4% increase in gas station sales in May, driven by the nearly 8% increase in fuel prices.
Gas prices can act as a tax on consumers, affecting sales in other sectors of the economy in the same way as falling incomes. Research has shown that consumers respond to lower gas prices by spending more elsewhere in the economy and spending less to higher gas prices.
Sales in furniture stores fell 0.9%. Sales in electronics and white goods stores fell 1.3%. Sales in health and personal care stores fell 0.2%. Online sales fell one percent. Adjusted for inflation, these sales are even lower.
Grocery sales rose 1.2 percent, but are likely to decline in real terms. The food consumer price index rose 1.4 percent during the month. In other words, the increase in grocery sales reflects that consumers are paying more for food rather than buying more.
Department store sales were up 0.9 percent, possibly reflecting higher prices from higher actual sales. Sales in clothing stores rose 0.1 percent. In sporting goods stores, it increased by 0.4%.
While sales in bars and restaurants increased by 0.7 percent, the prices of food consumed outside the home decreased in real terms and increased by 1.2 percent.
Source: Breitbart
