NEW YORK (AP) — Shoppers paused their spending June from May as they wrestle with moderating inflation but still high interest rates that have made buying anything on credit more expensive.
Retail sales were unchanged in June from May, after being revised upward at up 0.3% in May, according to the Commerce Department. Economists expected a decline for June. Last month, April sales were revised downward — a 0.2% decline, from unchanged. Sales rose 0.6% in March and 0.9% in February. That comes after sales fell 1.1% in January, dragged down in part by inclement weather.
Excluding gas prices and auto sales, retail sales rose 0.8%.
Online sales rose 1.9% while business at restaurants rose 0.3%. Clothing and accessories store sales rose 0.6%. Electronics and home appliance stores saw a 0.4% gain.
Government retail data isn’t adjusted for inflation, which declined 0.1% from May to June, according to the latest government report. High inflation helps to inflate retail sales figures.
Federal Reserve Chair Jerome Powell said Monday that the Federal Reserve is becoming more convinced that inflation is headed back to its 2% target and said the Fed would cut rates before the pace of price increases actually reached that point.
Last week, the government reported that consumer prices declined slightly from May to June, bringing inflation down to a year-over-year rate of 3%, from 3.3% in May. June marked a third straight month of declines, a sign that the worst price spike in four decades is steadily fading and may soon bring in interest rate cuts by the Federal Reserve.
So-called “core” prices, which exclude volatile energy and food costs and often provide a better read of where inflation is likely headed, climbed 3.3% from a year earlier, below 3.4% in May.
Meanwhile, America’s employers delivered another healthy month of hiring in June, adding 206,000 jobs and once again underscoring the U.S. economy’s ability to withstand high interest rates.
The retail sales report comes as there’s been some upheaval in the retail landscape.
Earlier this month, the parent company of Saks Fifth Avenue signed a deal to buy upscale rival Neiman Marcus Group, which owns Neiman Marcus and Bergdorf Goodman stores, for $2.65 billion, with online behemoth Amazon holding a minority stake.
The new entity will be called Saks Global, creating a luxury powerhouse at a time when the arena has become increasingly fragmented with different players, from online marketplaces that sell luxury goods to upscale fashion and accessories brands opening up their own stores.
Macy’s announced on Monday it was terminating its monthslong buyout talks with two investment firms, citing a substandard offer and the lack of certainty over financing. Macy’s said it will focus on its own turnaround efforts. That previously unveiled plan includes closing 150 Macy’s stores over the next three years and upgrading the remaining 350 stores.
Meanwhile, grocery chain Stop & Shop, squeezed by rivals like Walmart and Aldi, said Friday it will close 32 underperforming grocery stores in the Northeast by year-end. The chain, which is owned by the Dutch supermarket company Ahold Delhaize, said it will close 10 stores in New Jersey, eight stores in Massachusetts, seven stores in New York, five stores in Connecticut and two stores in Rhode Island.
