The food and beverage industry proved its mettle again last month, continuing a trend that started in the pandemic and evolved during supply chain challenges and inflation spikes. The latest data from the U.S. Census Bureau showed that total retail and foodservice sales rose a higher-than-expected 0.7% last month to top $696.4 billion, with sales at grocery stores edging up 0.8% from $73.15 billion in June to $73.72 billion in July on an adjusted basis. Grocery sales last month came in 2.3% higher than the $72.04 billion rung up in July 2022, which was a record-setting period for inflation.
For the first seven months of 2023, grocery sales exceeded $509.7 billion, a 3.5% year-over-year lift. The latest Census Bureau data comes on the heels of last week’s Consumer Price Index (CPI) report for July, which showed a general cooling of inflation but a 0.3% uptick in grocery prices.
The most recent figures underscore consumers’ ongoing willingness to spend, albeit differently in some cases, and may be in indicator of a deep recession that’s been put off a bit. "As many economic indicators continue to point toward a stronger economy than previously anticipated, the recent retail sales report shows continued growth over the previous month – particularly in the food and beverage sector,” observed Matt Pavich, senior director of strategy and innovation at Revionics, an Aptos company specialized in AI-driven pricing optimization for retailers. “Although consumers are very price conscious after an extended period of inflation, they nevertheless are still spending with some confidence and growing the size of the retail market. While there are multiple factors which could impact future retail results, the July results are encouraging for retailers and consumers alike."
Heading into fall, one potential wrench in spending is the resumption of student loan payments in September. “[The repayments] could certainly slow down the consumer, but I don’t think it’s going to wholesale erode the resilience we have seen, especially when you’ve got a labor market that is working in the consumer’s favor,” said Elyse Ausenbaugh, a global investment strategist at JPMorgan, in an interview with Yahoo Finance.
In its August economic review, the National Retail Federation signaled that caution is still warranted, even as consumers continue to demonstrate staying power. “Consumer spending, which makes up approximately 70% of the U.S. economy, has played a major role in keeping the economic expansion on a good path,” the NRF report noted. “While job and wage gains have counterbalanced inflation, the stockpile of savings accumulated during the pandemic is dwindling and is no longer providing as much spending power as previously available.”