Retail Sales Research Brief

Spending rises for a sixth straight month, but headwinds mount. Consumers’ fortitude was again on display in June, with core retail sales up 0.4 percent monthly and 5.7 percent annually. Household budgets received a respite last month, thanks to a 9.7 percent decline in gas prices, which facilitated the first monthly decrease in inflation since May 2020. Still, not all retail categories benefited equally from the positive sales momentum. Amazon Prime Day, in-store counter-deals by other competing retailers, and World Cuprelated spending contributed to the online retail, sporting goods, and electronics categories notching the largest gains. Concurrently, sales declined across supermarkets, health and personal care stores, and apparel shops, suggesting a shift in discretionary spending among fixed-budget consumers. With fuel-cost pressure renewed in July, the recent decline in inflation could be short-lived. This could prompt some households to reduce both their necessity and discretionary spending.