The Commerce Department reported Wednesday that retail sales turned negative in May as consumers withdrew spending, while inflation rose.
Advance retail and food service spending fell 0.3% for the month, well below the Dow Jones’ forecast of 0.1% profit. Excluding auto, sales grew 0.5%, which was below expectations of 0.8% growth.
The numbers, not adjusted for inflation, rose 1% on the headline number for the month and 0.6% excluding food and energy.
Sales were well below momentum in April, registering a revised 0.7% growth, down from an initial 0.9% estimate.
Spending declined for the month, even as sales at gas stations rose 4%, driven by fuel prices touching new highs, regularly unleaded $4.43 per gallon in May and now running around $5. Is. That increase was offset by a 3.5% decline in automotive and parts dealers.
Miscellaneous store retailers saw a 1.1% drop in sales, while online stores posted a 1% drop. Bars and restaurants posted a 0.7% increase, part of a broader trend in which spending has gradually shifted from goods back to services.
On an annualized basis, sales were still up 8.1%, as expenses combined with higher prices put a floor under the number. Consumers have been resilient through the wave of inflation, using savings to offset higher costs.
The retail release comes on the same day that the Federal Reserve is expected to raise interest rates by three-quarters of a percent in an effort to tame inflation. The consumer price index for May rose 8.6% year-on-year, the highest since December 1981 and far higher than the Fed’s 2% target.