Retail Sales Research Brief

Recent spending may provide a window into months ahead. Core retail sales rose 4.4 percent on a year-over-year basis in July; however, consumers are beginning to pullback. When accounting for core CPI inflation, which rose 0.3 percent last month, core retail spending dipped 0.1 percent in July. Larger declines were registered across discretionary categories — electronics, building and gardening materials, and restaurants and bars — while necessity-based retailers — grocery and health and personal care stores — noted real-term gains. Moving forward, steeper price hikes may be on the horizon for consumers. In July, the Producer Price Index rose at its fastest pace in more than three years, with businesses likely to pass costs onto shoppers. This dynamic, along with declining consumer sentiment and a slowdown in hiring, points to a potentially volatile second half for the retail sector. Fortunately, property fundamentals remain historically strong.