US retail growth softens as tariff fears fade
Retail sales in the United States continued to grow in May, although the pace of spending eased compared to previous months, according to the latest CNBC/NRF Retail Monitor powered by Affinity Solutions.
The data, based on actual consumer card transactions rather than surveys, shows a shift in consumer behaviour amid increasing economic uncertainty and ahead of potential tariff-related price hikes.
Total retail sales, excluding automobiles and fuel, rose by 0.49% on a seasonally adjusted basis in May, a slower rate than April's 0.72% increase. On a year-over-year basis, unadjusted sales grew by 4.44%, down from April's 6.76%.
Core retail sales—which also exclude restaurants—were up 0.23% month over month and 4.2% year over year. In contrast, April saw stronger gains of 0.9% monthly and 7.11% annually.
Despite the slower momentum, retail sales have maintained a positive trajectory, with total sales up 4.95% year to date and core sales rising by 5.24%.
This suggests that while spending habits are shifting, overall consumer demand remains resilient.
National Retail Federation President and CEO Matthew Shay noted that the earlier increase in spending driven by concerns over tariffs now appears to be levelling out.
'The data for May indicates that the pull-forward in consumer demand ahead of tariffs is likely dissipating,' he said. Shay added that although the economy faces uncertainties, a still-growing job market is helping households manage their spending priorities.
The slight cooling in retail sales comes as inflation pressures persist and interest rates remain elevated. Nevertheless, consumer fundamentals such as employment and wage growth continue to provide underlying support for spending.
Retail categories showed mixed performance in May, with seven out of nine sectors reporting year-over-year gains.
Digital products experienced the most notable growth, rising by 28.04% annually and 1.81% monthly. Sporting goods, hobby, music, and book stores also performed well, up 8.21% year over year and 0.42% month over month.
General merchandise stores saw increases of 4.63% annually and 0.4% monthly. Grocery and beverage retailers recorded a 4.53% year-on-year gain and a 0.46% monthly rise, while health and personal care shops rose by 3.85% and 0.06%, respectively.
Clothing and accessory sales were up 3.21% compared to last year, with a monthly gain of 0.67%. In contrast, electronics and appliance stores fell by 1.98% month over month, although they were still up 2.58% annually.
Some sectors experienced outright declines. Furniture and home furnishings were down 0.24% monthly and 0.1% annually. Building and garden supply stores saw the steepest drop, falling 2.3% from April and 7.31% from May last year.
Unlike traditional estimates from the US Census Bureau, which rely on survey responses and are subject to revisions, the Retail Monitor uses anonymised credit and debit card data from Affinity Solutions.
This allows for more immediate and consistent tracking of consumer spending trends.
The results for May suggest that while consumers are becoming more selective, they are not pulling back entirely. Retailers will be watching closely in the coming months as the effects of tariffs, inflation, and interest rates continue to shape purchasing patterns.
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"US retail growth softens as tariff fears fade" was originally created and published by Retail Insight Network, a GlobalData owned brand.
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