Consumers barely kept up with inflation in April, as retail sales increased but fell short of expectations, the Commerce Department reported Tuesday. The advanced sales report showed an increase of 0.4 percent, below the Dow Jones estimate for 0.8 percent. Excluding auto-related figures, sales increased 0.4 percent, which was in line with expectations. As the numbers are not adjusted for inflation, the headline increase equaled the 0.4 percent monthly rise in the consumer price index. On an annual basis, sales were up just 1.6 percent, well below the 4.9 percent CPI pace. Though the report indicated a struggling consumer, it was the first positive reading since January and followed a 0.7 percent decline in March.
Total Retail’s Take: April’s retail sales numbers show that inflation is continuing to challenge consumers and retailers alike. Here’s a sampling of industry reaction to April’s sales numbers, which was sent to Total Retail:
“April’s retail sales (excluding fuel and auto) came in line with expectations, offering a rebound after two months of decline,” says Claire Tassin, retail and e-commerce analyst at decision intelligence company Morning Consult. “While this is good news, inflation’s persistent impact on consumers is apparent in the year-over-year comparisons with significant drops in discretionary categories like home furnishings (down 6.4 percent) and electronics (down 7.3 percent).
“In an April survey, 85 percent of Americans said they’re concerned about inflation’s impact on their household finances, up 6 points from January and in line with data from inflation’s peak in 2022. That means shoppers continue to make tough trade offs and defer purchases in order to meet their financial obligations.”
David Silverman, senior director, Fitch Ratings, offered the following commentary: “Retail sales are moderating, demonstrated by around 4.3 percent year-over-year growth in retail sales (excluding auto and gas) and declines across most categories other than grocery, general merchandise and restaurants. Sales deceleration from the 6 percent to 7 percent seen in recent months is somewhat due to easing inflation but also a softening consumer and continued spending shifts toward services. Fitch expects sales volumes across many retailers to be negative this year, with this morning’s Home Depot report an example, although good inventory and cost control could support operating earnings and cash flow for better managed companies.”
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