Retail Sales Fell 1.3 Percent in May, Even as Prices Soared
Consumers spent far less than expected on retail goods in May as inflation soared to the highest levels in years.
Retail sales declined a seasonal adjusted 1.3 percent in May from the month before, the U.S. Commerce Department said Tuesday. The consensus forecast was for a smaller decline of 0.5 percent.
Economists had expected a small decline as the economy settled down after the wild stimulus distortions of March and April. As well, the lack of cars for sale due to a worldwide shortage of chips, was expected to drag down the overall number. Sales at auto dealerships fell 3.7 percent last month, according to the Commerce Department.
But sales fell even excluding vehicles and gas. Economists had expected this narrower category to rise 0.2 percent. Instead, it fell by 0.8 percent.
Another reason for the decrease: As more people become vaccinated and head out more, Americans are spending more of their money on haircuts, trips, and other services that are not included in Tuesday’s report. Sales fell at furniture, electronics and home building stores last month.
“Consumer spending growth through the rest of the year will shift to services from goods,” wrote PNC chief economist Gus Faucher.
Sales at restaurants rose nearly 2 percent, according to Tuesday’s report. And those seeking a new outfit to go out in helped sales at clothing stores rise 3 percent.