Mar 17, 2022
Retail sales in February were up 17.6 percent year-over-year and 0.2 percent from January, according to the U.S. Census Bureau. January’s month-over-month gain was also revised upward to 4.9 percent.
The gains demonstrate continuing strength in consumer spending, although there are signs that inflation may be causing some to hold off purchases or trade down to less expensive alternatives.
Rising prices for food and fuel boosted the dollar sales gain in February, but unit sales are a different story. The NPD Group found that year-over-year apparel, footwear, sports equipment and toy unit sales fell between December 26 and March 5.
“Price sensitivity is starting to show up,” Marshal Cohen, NPD’s chief retail industry adviser, told The Wall Street Journal. “There is a threshold that consumers don’t want to go over.”
“With the highest levels in 40 years, there is no doubt continued increases in inflation are hitting household purchasing power and likely restraining spending,” Jack Kleinhenz, the National Retail Federation’s chief economist, said in a statement. “We shouldn’t be surprised by the slower pace of sales given that purchases had surged in January and the upward revisions made to those numbers. And the double-digit year-over-year increase was expected given that much of the economy was still in stay-at-home mode a year earlier.”
NRF earlier this week forecast retail sales, excluding autos, would increase this year between six and eight percent. The trade group expects inflation to remain higher than was previously expected and doesn’t see a “cool down” happening until some point next year when the Federal Reserve reaches its two percent rate target.
The side effects of Russia’s attack on Ukraine remains a wild card in forecasts and some, such as Joel Prakken, chief US Economist and co-head of US Economics, IHS Markit, expects the impact to be more negative than NRF.
Mr. Prakken, who participated on NRF’s “State of Retail and the Consumer” event on Tuesday, said his firm’s “initial analysis of the fallout from the Russian invasion of Ukraine … clearly implies [a] much higher increase, much higher gasoline prices, much higher food prices, slower economic growth, financial uncertainties, all of which have led us to trim about half a percentage point from our baseline forecast for U.S. growth measure fourth quarter to fourth quarter all the way down to 2.4.”
DISCUSSION QUESTIONS: What categories are most at risk to rising inflation? How do you expect retailers to respond to declining unit sales?
"Consumers won’t all do the same thing and every category is going to be impacted differently. "
"behavior" - Google News
March 17, 2022 at 10:22PM
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What inflation-era consumer behavior should we expect next? – RetailWire - RetailWire
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