Retail sales data for July 2023 has surprised experts with a 0.7% increase. Various factors may have contributed to the rise, but it may be short-lived.
Good news! Despite concerns over inflation-hit shoppers, US retail sales performed better than expected, achieving a 0.7% bump, month over month (MoM)—beating the 0.4% Dow Jones estimate.
It has been suggested that products in several categories are now more affordable as retailers race to lower prices, which could pull in more shoppers.
For example, according to the Consumer Price Index July 2023 release, the following categories declined the most in terms of price between June and July:
- Newspapers and magazines -2.8%
- Computer software and accessories -2.7%
- Toys, games, hobbies, and playground equipment -3.3%
- Photographic equipment -3.5%
Boost has also partially been attributed to Amazon’s Prime Day event on July 11th to 12th, which is said to have been their ‘biggest-ever,’ announcing record profits.
Back-to-school spending has also been credited as a major driving force (in Florida, in particular, August could see a further boost as the state cuts sales tax on school supplies).
Earnings reports from other retailers such as Target and Walmart, which are expected in the coming week, may provide further insight into what the retail industry thinks about this current change in consumer spending.
Despite the growth, experts urge caution over the coming months ahead, pointing to higher interest rates and slowing wage growth, which are some of the obstacles that could cool consumer spending.
Some platforms, such as Amazon, are already looking for ways to get ahead of this, announcing a second Prime Day this October.