August Retail Spending up Against Backdrop of Falling Gas Prices

Retail spending inched up in August as prices at the gas pump continued to fall and consumers forged forward despite high inflation and rising interest rates taking a bigger bite of household budgets.

Retail sales rose 0.3% last month after a downwardly revised 0.4% drop in July, according to the monthly report from the Commerce Department on Thursday (Sept. 15). Excluding gasoline, retail sales were up 0.8%. Prices aren’t adjusted for inflation.

Surging auto sales and slumping gasoline prices masked a tepid 0.2% increase in core retail sales last month, which were further held back by weakness in furniture and eCommerce.

See also: Electrolux Says Consumers and Retailers Are Scaling Back Appliance Orders

While consumers pulled back on spending in furniture stores, health and personal care retailers and non-store retailers, car dealers saw a jump in sales. Gas prices ended closed out August at under $4 a gallon, down from a high of $5 peak in mid-June.

Spending at grocery stores rose 0.5% as food prices stayed on an upward trajectory. The cost of food at home has surged 13.5% in the last year, the most since 1979. Restaurants saw business increase 1.1%, but online sales dropped 0.7%. Clothing stores sales went up 0.4% while sales at furniture stores fell 1.3%

Read more: Retailers Brace as 70% of US Consumers Skip Retail Purchases to Buy Groceries and Gas

A newly published PYMNTS study, the second in a monthly series on the impact of inflation on consumer spending, showed that 70% of consumers are reducing their spend on retail purchases to pay for the rising cost of essentials such as groceries and gas. Nearly two-thirds of respondents said they expect the cost of food to continue to rise into next year.

Related: Retailers Retool to Attract Deal Seekers as ‘Value’ Takes Center Stage

Consumer spending accounts for nearly 70% of U.S. economic activity. The Commerce Department’s monthly retail sales report covers roughly one-third of all consumer purchases and doesn’t include spending on most services. Airfare, movie tickets and doctor visits are among the items not covered in the report.

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