Despite pressure from inflation and high interest rates, shoppers found enough room in their budgets to shop in April, albeit while cutting back on some luxuries.
Retail sales rose 0.4% in April to $686 billion, reversing direction after two months of declines, the Census Bureau said Tuesday. It was only the second increase in six months and below the 0.8% jump that economists had forecast, leaving sales still below the $693 billion peak they hit in January. Sales rose a healthier 0.6% outside of gas and cars, matching the median forecast of economists.
“Inflation’s persistent impact on consumers is apparent in the year-on-year comparisons with significant drops in discretionary categories,” Claire Tassin, a retail and e-commerce analyst at Morning Consult, said in a commentary. “Shoppers continue to make tough trade-offs and defer purchases in order to meet their financial obligations.”
The report highlighted how increases in the cost of living since 2021 have forced people to change their spending patterns.
While inflation is on a definite decelerating trend, things like food and cars are much more expensive than they were a year ago. Tassin cited an April Morning Consult poll that showed 85% of Americans said they were concerned about inflation’s impact on their household finances.
Sales were up in a few categories such as online stores, which rose 1.2%, and restaurants, which rose 0.6%. However, the stress household budgets are under took its toll on sales of home furnishings, which fell 0.7% (down 6.4% over the last year) and electronics, which dropped 0.5% for a 7.3% year-over-year drop.