Retail Sales Slow In March As Prices Continue To Climb

The U.S. Census Bureau posted March sales figures showing a month-over-month slight increase of 0.5% compared to February gains of 0.8% and January which was up 5.1% (seasonally adjusted). The stagnant growth of sales comes off the heels of the U.S. Bureau of Labor Statistics report on the consumer price index (CPI) rising 8.5% for the 12 months ending March 2022. The CPI was the largest 12-month increase since the period ending December 1981. The two categories that had the largest impact on the rising price index were food at 8.8% and energy at 6.9%.

As prices continue to rise at levels not seen in forty years, consumers are pulling back spending across some discretionary categories to fund essential items. Grocery and gasoline sales were up 1.3% and 8.9% respectively in March compared to last month. Gasoline sales are 37% higher this year compared to last year and 50% more than in 2019 (pre-pandemic levels). As more employees returned to work in March, spending on commuting increased.

Non-store sales (mostly made up of online sales and representing 13.6% of total sales) dropped the most in March, down 6.9% from February. In January nonstore sales were 15.2% of total retail sales and in February the number dropped to 14.6%, showing the steady decline in online sales since the start of 2022.

Department stores sales in March were also down from February by 0.3%, although clothing sales were up 2.6%, partly attributed to higher prices. According to the CPI, apparel prices were up 0.6% for March and are 6.8% higher for the full year ending March 2022. Discount store and warehouse club sales, which also encompass some grocery items, were up 6.6% in March compared to February. As prices rise, consumer purchasing at discount stores will grow as seen in March sales results.

With rising prices for essentials like food, energy and commuting expenses, consumer spending in discretionary categories like apparel and fashion goods may decline.

Source: Forbes