Retail Sales Dip in May Thanks to Inflation, Higher Prices
Retail sales were down in May compared to the month before, suggesting continuing inflation and higher prices for essentials has been a growing concern to the American consumer. It's the first drop in retail sales in five months. The U.S. Census Bureau, in its monthly estimates report released Wednesday, said U.S. retail and food services sales for May was $672.9 billion, a decrease of .3 percent month-over-month. Compared to May 2021, however, sales were up 8.1 percent.
"“There’s been little relief from inflation, and we expected some cooling off in sales in reaction to prices," National Retail Federation Chief Economist Jack Kleinhenz said in a news release. "There have been swings across sectors that reflect the impact of both higher prices and supply chain disturbances, and higher interest rates are expected to curb spending going forward. As inflation continues, consumers are looking for ways to stretch their dollars by saving less, tapping into savings accumulated during the pandemic, and increasing their use of credit.”
Total Retail's Take: As NRF President and CEO Matthew Shay put it, Americans are feeling the impact on the cost of everything from groceries to gas, even as retailers are doing what they can to keep prices down. Economists say May's retail numbers weren't surprising given rising federal interest rates and historical inflation, and that Americans' spending desires may become less focused on product and more on experiences like travel, entertainment and other services.
David Silverman, senior director of Fitch Ratings, an American credit rating agency, said he expects retailers to heighten their promotional activity through the summer as they try to clear excess goods, and that reduced inventory orders could help overall industry health while easing some supply chain concerns.
