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U.S. Retail Sales Fell in May as Inflation Bites

Economic Indicators Jun 15, 2022 08:37AM ET
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© Reuters.

By Geoffrey Smith 

Investing.com -- U.S. retail sales fell for the first time in five months in May, suggesting that the economy is cooling faster than thought as the Federal Reserve tightens monetary policy.

Retail sales fell 0.3%, while core retail sales, which strip out some of the index's more volatile components rose 0.5%, less than the 0.8% expected. April data for both series were also revised down. 

The report said that sales growth slowed to 8.1% on the year. As the data are not adjusted for price changes, that suggests that retail sales volumes fell from a year earlier, given that annual inflation ran at an annual rate of 8.6% in May.

Spending weakened conspicuously in big-ticket and durable goods sectors, with sales of autos and car parts falling 3.5%, furniture sales falling 0.9% and sales of electronics and other appliances falling 1.3%. Non-store retailers, which profited disproportionately from the surge in online shopping during the pandemic, also saw a further 1.0% decline in their sales. Sales of apparel edged up only 0.1%, after a 6% surge in April due to the emergence of spring and summer catalogs, while general merchandise sales also only notched a 0.1% rise. 

Anecdotal evidence of higher prices hitting consumer spending has been mounting for some weeks now, since a slew of forecast downgrades from retailers including Walmart (NYSE:WMT) and Target (NYSE:TGT) during the last quarterly earnings season. Target has since warned that it would have to cut prices to shift high volumes of unsold inventory.

"This IS the inflation peak," said Dan Alpert, managing partner of Westwood Capital via Twitter. "The news from Target last week was not an anomaly."

There was further evidence of rising energy costs crimping spending on other goods and services. Sales at gas stations, which had risen 43% in April as the effects of Russia's Ukraine war reached the pumps, rose another 4% in May. By contrast, sales at bars and restaurants, which had grown over 17% in April thanks to the arrival of spring and the fading of the pandemic, slowed sharply - they grew only 0.7%.

Elsewhere, there were further - albeit still tentative - signs of inflation pressures starting to ease in the New York Fed's Empire State Manufacturing Survey, published at the same time. The survey's main index improved to -1.2 from -11.6 in May, but inventories rose markedly.

 
U.S. Retail Sales Fell in May as Inflation Bites
 

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Comments (10)
Vi Ma
Vi Ma Jun 15, 2022 10:00AM ET
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Demand Destruction cannot assure Inflation Peaking.
Baer Markit
Baer Markit Jun 15, 2022 9:23AM ET
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This is what we want and need to slow down the economy to reduce inflation. Great news.
Dennis Wozny
Dennis Wozny Jun 15, 2022 9:22AM ET
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We have not even comeClose toBottom.
Give Me The Money
GiveMeTheMoney Jun 15, 2022 9:19AM ET
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The FED has allowed inflation to get out of control. Equity and credit markets have therefore lost confidence in the Fed. Market confidence can be restored if the Fed takes aggressive action with 75 bps and in July.
Casador Del Oso
Casador Del Oso Jun 15, 2022 9:05AM ET
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stock market up
dar dar
dar dar Jun 15, 2022 9:03AM ET
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I am no expert by far but you have to find a place for your money and I would think that would be specific stocks some commodities otherwise your money will never keep up with our current state of stackflation which in my humble opinion will last another five years
dar dar
dar dar Jun 15, 2022 9:03AM ET
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let me add our Fiat money which I guess really isn't money but what the *******you going to do unless your Uber Uber full of Fiat
spiderman Spider
spiderman Spider Jun 15, 2022 9:01AM ET
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we mess up
Ayumastura PinkLady
Ayumastura PinkLady Jun 15, 2022 8:53AM ET
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that's not cooling lol... price still increase spending drop is that what u call cooling?? OMG it's stagflation!
Jan Buyle
Jan Buyle Jun 15, 2022 8:53AM ET
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Stagflation is coming, have no doubt about that. Buy fixed assets like houses, railway & infrastructure stocks, commodities, gold, silver to survive this battle...
Ser hh
Ser hh Jun 15, 2022 8:49AM ET
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Monumental drop coming today with the .75 nuclear bomb.
Give Me The Money
GiveMeTheMoney Jun 15, 2022 8:49AM ET
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Fed hiking 75bps will send stocks up; Fed hiking 100bps will send them higher and 150bps highest... as it means recession, rate cuts and QE come much faster
 
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