Retail same-store sales jumped to 7.1% growth in June as a drop in gasoline prices began to cushion the impact of price pressures on shoppers spending plans, according to Kantar Retail.

The sales-weighted composite for the 28 retailers reporting-most of them apparel retailers-was better than the 5.7% same-store sales gain last month and the 3.2% gain in June of 2010. Note that the calculations no longer include Walmart, which stopped reporting monthly results in April 2009. 

High fuel and food prices will still take a toll, but a sustained letup in gasoline prices will help ensure that the toll means slower growth instead of outright declines in discretionary spending in the months ahead, said Frank Badillo, Senior Economist. 

Average U.S. gasoline prices slipped to $3.58 a gallon by July 4 after peaking near $4.00 a gallon through mid-May, according to data from the U.S. Energy Information Administration.

The results were led by stronger-than-average gains at Food, Drug and Mass retailers, some of which benefit from elevated gasoline prices.  But Department Stores and Apparel and Accessory Stores followed closely behind. 

With growth holding up-particularly discretionary purchases at apparel and department stores-an expected letup in the coming months may prove to be more modest than feared based on spending intentions reported by shoppers in the June ShopperScape survey by Kantar Retail:

  • After deteriorating for three straight months, spending intentions show signs of leveling out.  The encouraging sign may be partly in response to a falloff in gasoline prices, which declined in June from their mid-May peak.

  • The positive sign is most evident in terms of intentions to spend about the same or spend somewhat/much more.  Those measures held about the same as May after deteriorating by about 4 percentage points since February. Shoppers also are not tilting decidedly more negative as they look ahead to their spending plans for the back-to-school shopping season

  • Although slightly fewer shoppers plan to spend about the same on back-to-school purchases this year compared with last year, the movement among shoppers appears to be roughly split between those planning to spend more and those planning to spend less.
    Although the slowing pressures may moderate in the coming months, its clear that the financial health of households remains biased toward weaker growth.

  • All six measures of household financial health deteriorated on a month-to-month basis to some extent (although not necessarily by a statistically significant amount).  The biggest deterioration is in terms of wealth measures (home values and household investments)-although that likely has been mitigated by the stock market rebound as July began.

  • The month-to-month trends in the household financial health measures tend to outweigh the fact that some of the measures (e.g., job security, credit cards, mortgage/car payments and investments) are better than a year ago.