Key facts
- US retail sales fell 0.6% in July, the largest drop in over a year.
- Economists had forecast a 0.1% rise in retail sales for July.
- Spending decreased at gas stations, auto dealers, and for electronics and appliances.
- Online sales also declined, while restaurant sales saw a modest increase.
- Consumer prices rose 3.4% year-over-year in July, down slightly from June.
Americans unexpectedly cut their spending in July by the biggest amount in more than a year, with retail sales falling 0.6% according to Commerce Department data. This marks the largest decrease since May 2025 and missed forecasts of a 0.1% gain. The decline raises concerns about the resilience of consumers who have been a key driver of the US economy, especially following sluggish job figures released last week.
Consumers are contending with persistent inflation that has outpaced wage growth, and may have depleted government tax refunds that previously helped offset rising costs. Spending at gas stations fell 0.9% in July, while sales at auto dealers dropped 1.8% and electronics and appliance sales declined 0.5%. Online sales also saw a decrease of 2.2%. Restaurants were a bright spot, with sales increasing by 0.5%.
Inflation, while slightly down from previous months, remains a concern. Consumer prices increased 3.4% in July from a year ago, a slight decrease from 3.5% in June. Gas prices have been rising, reaching $4.08 per gallon, a significant increase from the previous year. Retailers are preparing for quarterly earnings reports next week, with some noting increased foot traffic due to summer festivities and people vacationing domestically to save money.