Retail sales growth moderates in July

Latest reading: Retail sales grew 0.5% month-on-month in seasonally adjusted terms in July (June: +0.9% mom), in line with market expectations. The biggest sales gains came from motor vehicle and parts dealers and furniture stores, with smaller increases at sporting goods, non-store, clothing and gas stations. Declines were seen at miscellaneous retailers, building materials and electronics stores. On an annual basis, retail sales rose at a softer pace of 3.9% in July (June: +4.4% yoy).

Panelist insight: TD Economics’ Ksenia Bushmeneva said: “Retail sales are reported in nominal values, with price changes mudding the water. The latest inflation report has shown that core inflation is gathering momentum. Core goods prices continued to rise, with two-thirds of goods categories now seeing price gains over the last three months. Up until recently, businesses have tried to absorb higher costs and shield consumers, but the last few months have shown that some of the costs are now being passed on. We expect greater pass through of tariff-related price increases over the coming months. With the labor market downshifting and cost pressures heating up, consumer spending is likely to remain tepid through year-end.”

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