The Census Bureau reports Wednesday that retail activity was stagnant in July due to lower fuel prices, and people turning more towards online shopping.
Advance retail sales remained the same, but total receipts excluding automobiles increased 0.4%. Dow Jones economists had expected 0.1% growth in the top line number, and flat total ex-autos. The June gain was revised to 0.8%, down from 1%.
Sales of retail and food, which exclude gasoline and automobiles, rose 0.7% over a month prior.
These numbers have been adjusted for seasonality but not inflation and were taken during a time when the consumer price index was also flat.
Sales at the pump fell due to a drop in fuel prices from their records nominal highs, which resulted in gas station receipts falling 1.8%. The sales of motor vehicles and parts dealers fell 1.6%.
Gas prices were high at $5.50 per gallon, in some areas, earlier in summer. But, the price dropped to $3.94 for regular unleaded gas, according AAA.
“People appear to have used some of the savings from lower gas prices to spend more on other items, both in nominal and — very likely — real terms,” wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics. The chip shortage has severely reduced auto sales, so the potential for pent-up demand is significant. Department stores and clothing shops were the other losers in July, although all components of this system are loud and vulnerable to change.”
This was offset by 2.7% more online sales and 1.5% growth in miscellaneous retail.
Inflation has caused prices to rise 8.5% over a year, which is close to their highest point in forty years. Consumers are trying to cope with this. The price rises in food and energy have been particularly detrimental; gas station receipts rose 39.9% despite the July slump in energy prices.
July was a time of relief from rising inflation. The drop in fuel costs allowed consumers to make purchases elsewhere.
However, food sales increased by 0.2% despite the fact that the Bureau of Labor Statistics’s Food Price Index rose 1.1% in the same month. Restaurants and bars saw their sales decline by 0.1%.
Some retailers have also struggled to survive in today’s environment.
TargetOn Wednesday, its earnings tumbledClose to 90% increase in sales compared to a year ago, as it had to lower prices on unneeded inventory.
In order to keep inflation under control, the Federal Reserve uses interest rate hikes. After implementing consecutive 0.75 percentage points increases in June and Jul, the central bank is forecast to increase rates until inflation falls below the Fed’s 2% target.
Target corrected the error: Target said Wednesday that its earnings fell by close to 90% compared with a year earlier. In an earlier version, the number was not correct.
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