U.S. retail sales rose 0.6% in June, easily outpacing expectations and marking a rebound from May’s 0.9% decline. Economists had forecast a modest 0.1% uptick, making June’s jump a welcome surprise. The data, released Thursday by the Commerce Department, suggests consumers are still opening their wallets, though price hikes likely played a role.
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Tariffs Drive Prices Higher
Some of that increase wasn’t just more shopping. Inflation data earlier this week showed prices climbing for many goods sensitive to tariffs. Categories like furniture, appliances, toys and sporting goods all posted stronger price growth, which may have inflated the dollar value of retail sales without necessarily boosting volumes.
Core Retail Sales Stay Strong
The more stable measure — retail sales excluding cars, gas, building materials and restaurants — also saw strength. These “core” sales rose 0.5% in June, following a downwardly revised 0.2% gain in May. Core retail sales feed directly into the consumer spending component of GDP, making this a key number for tracking economic growth.
Household Sector Still Holds Up
“All told, the household sector still appears to be holding up, but a moderation in consumer spending appears under way,” said Sam Bullard, senior economist at Wells Fargo. He added that while shoppers are still spending, they may be getting more selective as prices climb and savings shrink.
Retail Stocks Could React
Retail-focused stocks like Walmart (WMT), Target (TGT) and Five Below (FIVE) could see movement as investors digest the sales beat and consider the impact of tariff-related price shifts. A stronger headline number may lift sentiment, but persistent inflation in goods categories could raise concerns about margins and future demand. Investors can track stock performance in real time using TipRanks’ Stocks Comparison Tool.
While the June numbers suggest resilience, analysts caution that future spending may be less predictable. Tariff-driven price increases could pressure households, especially in discretionary categories. Consumers are still holding up, but there’s less cushion than before.