Retail Sales Still Outpacing Inflation

A look at how retail sales are doing.

Retail sales cooled off a little in August, according to the Census Bureau’s latest U.S. retail sales numbers, which were released on Tuesday. Compared with July, sales were up 0.2 percent, which counted as a slowdown in growth, since sales gained a revised 0.7 percent in July compared with June, after dropping the month before. Retail sales are a volatile monthly metric, especially because the price of gas has a large impact on the totals for any particular month. The bureau adjusts its numbers for seasonal variation and holiday and trading-day differences, but not for price changes.

Annual retail sales numbers tell a tale of steady growth, which is fairly good news for most retailers. Sales were up 2.2 percent overall in August compared with a year earlier, which was roughly on par with the year-over-year gain of 2.4 percent in July, and beating the June year-over-year increase of 1.4 percent. Retail spending is thus a little ahead of the meager rate of inflation, and it’s also tracking the likewise meager increase in wages in the last few quarters. Then again, that’s only the average, which has been weighed down by gas sales. Spending at other kinds of retailers is generally up.

Sales at gas stations dropped again for the month, down in August by 1.8 percent compared with July, which reflected a downward trend in the price of gas after a minor rise earlier in the summer. Compared with a year ago, sales at gas stations were down 17.2 percent in August. Neither the monthly nor the annual data points are a surprise. According to AAA, a gallon of regular cost an average of $2.322 on Tuesday, while a month ago it was $2.667; and a year ago, the price was $3.390 per gallon. Besides gas stations, a few other retail categories were sales losers compared with last year, including electronics stores and department stores, but not by nearly as much.

Most other retailers have done considerably better than the average year-over-year. Food service and drinking places topped the list in August, with a gain of 8.2 percent compared with a year earlier. Car sales are still pretty hot, with an increase of 5.9 percent, but sporting goods did even better, chalking up a 6.1 percent annual gain. Other categories, such as grocery stores and furniture stores, were closer to the average but still above it. Non-store retailers—what the government calls Internet-based sales—continue to see healthy increases. In August, online sales were up 6.9 percent compared with last year.