Retail sales fall in February but are ‘still promising’
- Retail sales were down 0.4% in February after an impressive January.
- Sales dropped in nearly all sectors, except for in some essential categories like grocery.
- Retail Leader Pro Chief Analyst Elizabeth Lafontaine says while retail sales are lower, “the results are still promising.”
Retail sales were down 0.4% in February, as consumers face continued economic burdens resulting from inflation.
According to data from the U.S. Census Bureau, released March 15, consumers spent $697.6 billion in February, down from the $700.7 billion they spent in January. Retail sales were up 5.4% from February last year, though that figure doesn’t account for higher prices resulting from inflation.
Sales dropped in nearly all retail sectors, except for in some essential categories, where sales increased from January. Sales at food and beverages stores increased 0.5% from January, and they rose 0.6% at grocery stores alone. Sales at health and personal care stores grew by 0.9% — the most of any category — compared to January.
Sales fell the most at department stores, where they were 4% lower than January. Other notable decreases were in the furniture and home furnishing category, where they dropped 2.5% from last month, the food services and drinking places category, where sales sank 2.2% and the motor vehicle and parts dealer category, where they declined 1.8%.
The shrink in February followed an impressive increase in January, when sales rose by a revised 3.2%, according to the Census Bureau data. The retail sales slowdown last month follows months of continued inflationary pressures on consumers.
“Overall, while advance monthly retail sales in February 2023 decreased slightly compared to January, the results are still promising considering all of the noise surrounding the retail consumer in the U.S.,” says Retail Leader Pro Chief Analyst Elizabeth Lafontaine. “January outperformed many expectations due to increased demand post-holiday, so February indicates more of a return to form across the industry.
“According to Circana, general merchandise demand for February lags behind last year, indicating that consumers are certainly re-evaluating their current and upcoming retail purchases,” she added.
The consumer price index rose 0.4% in February, putting annual inflation at 6%, according to data from the U.S. Department of Labor released this week. Inflation peaked last summer at 9.1%.
While the U.S. is not technically in an economic recession, consumers are feeling the pressure of inflation and other economic variables, like high interest rates. As Retail Leader Pro recently reported, for retailers, responding to consumer perception is key.