August Retail Sales Rise Amid Back-to-School and Inflation

Shoppers increased their spending at a better-than-expected pace in August from July, helped by back-to-school shopping, even as President Donald Trump’s tariffs start to hurt the job market and lead to price increases, reports AP News. Retail sales rose 0.6 percent last month from July, when sales were up a revised 0.6 percent, according to the Commerce Department’s report. In June, retail sales rose 0.9 percent, the government agency said. The August performance, announced Tuesday, was also likely helped by the continued efforts by Americans to keep pushing up purchases ahead of expected price increases.

“Back-to-school shopping was a key theme in August, as evidenced by strong clothing and electronics sales," Bankrate Senior Industry Analyst Ted Rossman wrote in a note Tuesday. Government retail data isn’t adjusted for inflation, which rose 0.4 percent from July to August, according to the latest government report. That was faster than the 0.2 percent pace the previous month. So that could have inflated the sales figures as well.

Consumer prices increased 2.9 percent in August from a year earlier, the Labor Department said last week, up from 2.7 percent the previous month and the biggest jump since January. Stronger-than-expected retail sales, coupled with higher inflation as well as data showing soaring applications for unemployment aid, all create a complicated picture of the economy.

Total Retail's Take: August's sales increase provides another month of tentative good news for retailers. However, outlook is still on shaky ground as the numbers don't bear out the complicated set of factors influencing American consumers' purchasing decisions: looming tariff-induced pricing increases, back-to-school shopping deals, labor market volatility, and rising inflation, to name a few. According to David Silverman, senior director at Fitch Ratings, there may be some pulled-forward spending in advance of anticipated inflation, especially in categories like furniture, consumer electronics, and apparel.

"Fitch continues to expect retail sales to moderate through the remainder of 2025, including the holiday selling season, especially as tariffed inventory makes its way onto the shelf, raising overall pricing," Silverman wrote in a note to Total Retail. "A modestly softening labor market also points to the potential for spending deceleration. We believe keys to success remain a sharp understanding of a retail brand’s relationship with consumers, good negotiating positions with vendors, and a strong balance sheet and cash flow profile to withstand near-term volatility."

The CNBC/NRF Retail Monitor, powered by Affinity Solutions, also found that retail spending continued to grow in August as consumers stocked up on school supplies and tried to beat rising tariffs that could be beginning to affect prices. Total retail sales, excluding automobiles and gasoline, were up 0.5 percent seasonally adjusted month-over-month and up 6.81 percent unadjusted year-over-year in August.

"Even with weaker job growth than many expected, employment remains stable and at a high level, giving consumers the ability to spend thoughtfully on household priorities," NRF President and CEO Matthew Shay said. "Nonetheless, consumers are preserving spending power by cutting back on less-essential services.”