U.S. retail sales in May fell for 1st time in 5 months

Retail shopper.
(Image credit: David Paul Morris/Bloomberg via Getty Images)

U.S. retail sales in May saw their first drop in five months, as rampant inflation continued to terrorize consumers and upend markets, multiple outlets reported Wednesday.

The unexpected 0.3 percent plunge was driven in large part by a sharp drop in vehicle sales "due to high prices, low inventory and rising interest rates on car loans," notes The Wall Street Journal. Meanwhile, however, "spending at gas stations climbed 4 percent, likely reflecting higher fuel prices in the month," Bloomberg adds.

Consumers also tightened spending on goods like furniture, electronics, and online purchases. Such figures suggest U.S. demand for merchandise is "softening," Bloomberg writes, which might be a result of high inflation or perhaps just a greater affinity for services.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE
https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516.jpg

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

The figures arrived prior to the Federal Reserve's decision to raise interest rates by three-quarters of a percentage point, the central bank's largest hike since 1994.

"The Fed will need to see a sustained period of weakness in domestic demand and likely labor markets before breathing a sigh of relief on the inflation front," Sal Guatieri, senior economist at BMO Capital Markets in Toronto, told Reuters.

Several economists downgraded forecasts for real spending and GDP after reviewing the Commerce Department figures, per Bloomberg. The May report also showed data for April revised lower to reflect sales for the month increasing 0.7 percent, instead of 0.9 percent as was previously reported.

To continue reading this article...
Continue reading this article and get limited website access each month.
Get unlimited website access, exclusive newsletters plus much more.
Cancel or pause at any time.
Already a subscriber to The Week?
Not sure which email you used for your subscription? Contact us