SpendingPulse: Inflation Helped Boost Retail Sales by 8.7 Percent in July

 

Retail sales are on par with the average growth of the previous 3 months, and have held onto their momentum despite concerns from other areas of the economy.  

“Since March, non seasonally-adjusted retail sales have topped 8% year-over-year,” said Michael McNamara, VP of research and analysis for MasterCard Advisors SpendingPulse. “However, much of the 8.7 percent growth is from commodity based inflation in areas such as gasoline, food and cotton prices.   While the headline year-over-year increase resembles periods of strong economic growth, when you take a closer look at the comp environment and the year-over-year inflation, it tempers the enthusiasm that would normally accompany this level of year-over-year increase.”

McNamara  observed that the general state of the labor market and a mixed economic environment suggests that the current rate of retail expansion could be vulnerable, especially given the weight of higher fuel costs on discretionary spending. “Additional momentum in the labor market could offset that uncertainty,” he added.

Sectors showing positive results in July included e-commerce, Luxury, Apparel, Groceries and Travel.  E-commerce posted double-digit growth for the 9th consecutive month, with the unusually hot weather this July perhaps pushing consumers to e-commerce in greater numbers.  Luxury posted its tenth consecutive month of positive year over year growth. 

 

In July there was the first double-digit growth since April 2010.  Weaker segments included Furniture and Furnishings, Automotive repair, and Electronics and appliances.  Furniture and furnishings were negative year over year for the 6th consecutive month, likely due to their ties with the struggling housing sector.  In addition, automotive repair and maintenance went into the negative for the first time since January 2011. 
Retail Spending posted positive growth in every part of the country, with the best unadjusted year-over-year results in the Pacific and South central regions, respectively posting 11.0% and 11.9% growth.