Mixed Picture for Retailers Amid Shifting Drivers of Inflation

Summary Retailers recorded a 0.5% gain in nominal sales in March, but once adjusting for higher prices, we estimate real retail sales declined 1.6%. Nevertheless, the March retail sales reports still reveals the resilience of consumer spending. Inflation is not going away, but it will likely stop getting worse and that means less of a headwind for spending. Retail Sales Led Higher by Price Gains Retail sales increased 0.5% in March (chart), which was a bit short of the 0.6% that had been expected by the consensus. The numbers are not adjusted for inflation, but we describe in detail below how after applying some price adjustment it is evident that consumers are feeling the pinch. Predictably gas stations saw the largest percentage increase from February, posting an 8.9% increase on the month. The fact that gas prices rose a lot more than that suggests consumers are combining trips or taking advantage of work-from-home flexibility if they are able to. Supply chain constraints still weigh on sales activity for auto dealers, where sales fell 1.9% in March. E-commerce posted the largest monthly decline with a 6.4% drop. READ FULL ARTICLE>>