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Consumers ‘Taking Higher Prices in Stride’ Says National Retail Federation

Consumers ‘Taking Higher Prices in Stride’ Says National Retail Federation

May 19, 2022
Even with high gas prices and rising interest rates, wage gains are offsetting that with a tailwind that should bode well for moderate-but-steady spending growth going forward, says NRF.

It seems consumers are adjusting to inflation and so they continued to spend in April. Sales showed both monthly and year-over-year increases, according to the National Retail Federation on May 17.

“April retail sales demonstrate consumer strength and willingness to spend despite persistent inflation, supply chain constraints, market volatility and global unrest,” NRF CEO Matthew Shay said in a statement.

“While consumers are facing higher prices, they are preserving their budgets by shopping smart," Shay added. "Retail businesses are also facing increased costs like higher energy bills and rents as well as the cost for goods, transportation and wages. Despite already tight margins, retailers remain committed to their customers and are doing everything they can to absorb these costs to keep products affordable. With the Federal Reserve already raising interest rates, the Biden administration and Congress have an opportunity to provide targeted relief to American households by lifting the China tariffs, passing legislation to fix the supply chain, and addressing immigration reform to ease the tight labor market.”

Consumers are resilient explains NFR Chief Economist Jack Kleinhenz.  “Sales benefited from Easter/Passover spending and also from tax refunds, which have been delayed by pandemic-related issues at the IRS but are also larger than usual, he says. "High gasoline prices, rising interest rates and price pressures across the board continue to be headwinds to spending, but wage and job gains are offsetting that with a tailwind that should bode well for moderate-but-steady spending growth going forward.”

On May 17, the U.S. Census Bureau said overall retail sales in April were up 0.9% seasonally adjusted from March and up 8.2% year over year. That compared with increases of 1.4% month over month and 7.3% year over year in March.

NRF’s calculation of retail sales – which excludes automobile dealers, gasoline stations and restaurants to focus on core retail – showed April was up 0.9% seasonally adjusted from March and up 6.4% unadjusted year over year.

April sales were up in two-thirds of categories on both a monthly and yearly basis, with year-over-year gains led by online sales and clothing and grocery stores.

Specifics from key sectors include:

  • Online and other non-store sales were up 2.1% month over month seasonally adjusted and up 11.3% unadjusted year over year.
  • Clothing and clothing accessory stores were up 0.8 percent month over month seasonally adjusted and up 11.2 percent unadjusted year over year.
  • Grocery and beverage stores were down 0.2% month over month seasonally adjusted but up 8.9% unadjusted year over year.  
  • General merchandise stores were up 0.2% month over month seasonally adjusted and up 3.7% unadjusted year over year.
  • Health and personal care stores were up 0.7% month over month seasonally adjusted and up 1.2% unadjusted year over year.
  • Furniture and home furnishings stores were up 0.7% month over month seasonally adjusted and up 0.9% unadjusted year over year.
  • Building materials and garden supply stores were down 0.1% month over month seasonally adjusted and down 1.2% unadjusted year over year.
  • Sporting goods stores were down 0.5% month over month seasonally adjusted and down 3.1% unadjusted year over year.
  • Electronics and appliance stores were up 1% month over month seasonally adjusted but down 4.7% unadjusted year over year.

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