Retail sales rebound in June despite rising prices
Retail sales rebounded sharply in June in the face of high inflation, according to data released Friday by the Census Bureau, defying expectations of another monthly decline.
U.S. restaurants, bars and retailers brought in a seasonally adjusted $623.3 billion in sales last month, the Census Bureau reported, rising 0.6 percent from May. Economists largely expected retail sales to decline again after falling 1.7 percent in May, but spending sprees across other sectors of the economy offset a sharp drop in automobile sales.
Automobile and auto parts sales fell 2 percent as the industry faces severe supply constraints. Prices for both new and used cars have skyrocketed due to supply bottlenecks and a lack of used cars for sale, driving one-third of June’s 0.9 percent increase in consumer prices.
Even so, retail sales rose 1.3 percent in June when excluding the auto sector, driven by a 3.3 percent increase in sales from electronics and appliance stores, a 2.6 percent increase in clothing store sales, a 2.3 percent increase in restaurant and bar sales and a 5.9 percent jump in department store sales.
All of June’s leading sectors were some of the hardest hit by the pandemic and have rebounded strongly through the first half of 2021. Other sectors that fared better during lockdowns, such as furniture, home goods, sporting goods and hobby stores saw sales decline again in June as consumers pivoted to activities beyond the home.
“The great spending rotation saw households cut back on furniture, autos, sporting equipment and building material – categories that outperformed during the pandemic – while spending more freely at restaurants and bars, gas stations and electronic stores,” wrote Gregory Daco of Oxford Economics in a Friday analysis.
“While future retail sales readings may give the impression of hesitant consumers, they shouldn’t be viewed as a sign of wary households but rather a sign that vaccinated consumers are rotating their spending into services.”
The rebound in retail sales comes amid growing concern over inflation, which rose to an annualized rate of 5.4 percent in June, according to data released by the Labor Department last week. While much of the jump in inflation is due to short-term factors, price increases have still exceeded economists’ expectations and it remains uncertain when they will begin to settle.
Updated at 9:47 a.m.
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