A couple of days after the latest CPI data revealed a 0.1% uptick in overall prices and food-at-home prices, information from another arm of the U.S. government indicated that consumer resilience is just as sticky as inflation. The Census Bureau reported a 0.3% increase in retail sales from April to May and year-over-year bounce of 1.6%.
Retail and foodservice sales hit $686.6 billion last month on an adjusted basis, according to the Census Bureau's advanced estimates. Within the grocery sector, sales edged up slightly to nearly $73.8 billion compared to $73.6 billion in April and $73.7 billion in March. For the first five months of 2023, grocery sales topped $361.4 billion, a 4.6% lift over the same period in 2022. Information on warehouse club and supercenter sales is not yet available from the agency.
As many retailers have acknowledged in their recent earnings reports, inflation is contributing to higher sales figures. But the consumer hardiness shown in the fresh Census Bureau data is a sign that shoppers aren’t pulling back as much as it’s been feared amid recessionary talk.
“This was a positive report with no sign of an abruptly slowing economy despite what has happened with inflation and interest rate pressures,” observed Jack Kleinhenz, chief economist at the National Retail Federation. “Even though shoppers dialed back in some categories on a year-over-year basis, these numbers confirm that consumers still have the capacity to spend. Job growth and wages are providing buoyancy, although inflation continues to take a bite out of consumer income. May is typically a strong month for retail as spring shopping hits its peak, but above-average temperatures and below-average precipitation no doubt played a favorable role.”
NRF’s own calculation of core retail sales showed a 0.4% gain from the prior month and a 4.4% increase over 2022. The group noted that strong sales were led by grocery and beverage stores along with health and personal care stores and online sales.