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US Retail Sales Slip Amid Inflation Squeeze

December 18, 2022  |  Leah Meirovich
NRF US retail sales credit Shutterstock

US retail revenue fell in November as consumers felt the pinch of inflation and rising interest rates.

Revenue slipped 0.6% from the month before — adjusted for seasonal variation — compared with an increase of 1.3% in October, according to data the US Census Bureau released last week. The drop also reflected an unfavorable comparison with the previous month’s sales, which benefited from early holiday shopping amid strong promotions.

“While job and wage gains and built-up pandemic-era savings supported holiday shoppers in November, [consumers] were squeezed by inflation and higher interest rates,” said National Retail Federation (NRF) chief economist Jack Kleinhenz. “This was the first leg of the official holiday season and had a large hurdle to overcome with monthly comparisons because of early shopping in October.”

Sales climbed 6.5% from a year earlier, down from the 8% year-on-year increase in October but still strong results for the holiday period, the NRF noted.

“The healthy year-over-year comparison is more important and clearly shows that the economy is not in a recession,” Kleinhenz explained. “Spending is on track to meet our expectations for a solid holiday season.”

In November, sales advanced year on year in seven of the nine categories the US Census Bureau monitors. The clothing and accessories segment — which includes jewelry — rose 1.7%. However, the division was down 0.2% from October. Online sales across all products advanced 8% year on year but slid 0.9% versus the previous month.

Retail sales for the first 11 months of the year gained 7%, according to the NRF’s calculations. The sector is on track to meet the federation’s 6% to 8% holiday growth forecast for 2022, which, even on the low end, would top last year’s record figure, the NRF said.

Despite the predicted rise in retail sales, approximately 18% of merchandise purchased for the holiday will be returned, equating to nearly $171 billion, a survey the NRF conducted together with Appriss Retail found.

“The holidays typically include a spike in retail activity, but higher return rates can also impact profitability,” said Steve Prebble, CEO of Appriss.

Image: A couple shopping for the holidays. (Shutterstock)

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