Retail sales and food-service spending fell 0.3 percent in May after a 0.7 percent gain in April. Retail sales rose 7.1 percent from a year earlier. Total nominal retail sales are above the pre-epidemic trend (see first chart).
However, this information is not adjusted for price changes. In fact, total retail sales fell 1.2 percent in May (adjusted using CPI) after a 0.4 percent increase in April. Since a year ago, actual total retail sales have fallen 0.4 percent. Like nominal retail sales, actual retail sales tend to be above trend (see Chart 2).
Main retail sales, excluding motor vehicle dealers and petrol retailers, rose 0.1 percent month-on-month after a 0.8 percent gain in April (see first chart). Profits surpass that measure with a 7.9 percent increase over a year earlier.
After adjusting for price changes, real core retail sales fell 0.6 percent in May but rose 1.8 percent from a year earlier. Both the actual total and the actual original retail sales are above the previous trends (see the second chart).
Sections for the month were mixed with seven up and six down in May on a nominal basis. These gains were driven by petrol spending, rising 4.0 percent month-on-month. However, the average price of a gallon of gasoline was $ 4.70, up from 3 4.37 to 7.5 percent in April, suggesting a change from the one responsible for the price increase. Food and beverage store sales rose 1.2 percent in May, while restaurants gained 0.7 percent, and sales of sporting goods, hobbies, musical instruments and bookstores rose 0.4 percent (see Chart 3).
Among the rejecters, sales at automotive retailers fell 3.5 percent, followed by electronics and appliance store sales (1.3 percent off), miscellaneous store retailers (1.1 percent lower) and nonstore retailers (1.0 percent lower; see third chart).
Overall, retail sales have declined for the month and are pulled by slower auto sales but are on trend. With the exception of auto and gas, nominal original retail sales managed a small profit. However, rising prices are still providing a significant boost in numbers. In fact, total and core retail sales were lower for the month. Moreover, the ever-increasing rate of inflation has begun to have a negative effect on consumer sentiment and may lead to a contraction in spending.
While persistent labor shortages, material shortages and logistical problems could slow production recovery across the economy, maintaining upward pressure on prices, coupled with a new Fed tightening cycle could have an impact on consumer sentiment. Significant demand destroys and increases the risk of recession. Also, Russia’s invasion of Ukraine and the wave of lockdowns in China have become threats to economic expansion. The outlook has become extremely uncertain.