Retail Sales Climb in June Amid Surging Inflation
July 15, 2022
American consumers spent more in stores and restaurants in June but got less as they contended with the highest inflation in more than four decades.
U.S. retail sales rose 1.0% in June, according to the Commerce Department. May’s unexpected decline was also slightly smaller than previously estimated, with the month’s data upwardly revised to show a 0.1% decline.
It is important to keep in mind that retail sales data is not adjusted for inflation, so the figures likely reflect the impact of higher prices rather than an acceleration in spending activity. Consumer prices rose 9.1% in the year through June, the highest since late 1981.
Households’ ability to maintain spending amid higher prices reflects robust finances and a strong labor market, but as inflation continues to run rampant through the economy, economists worry that consumers may not be able to maintain their spending levels as the cost of living rises faster than incomes.
We are already seeing the dynamic play out in gas stations. Americans spent 3.6% more at gas stations in June than they did a month earlier, but gas prices rose by more than 11% in June. That suggests that consumers cut back on driving last month, according to some economists.