Sales at grocery stores back on upside in July

Bouncing back from a prior-month decline, grocery store sales rose in July amid improved growth for overall U.S. retail sales.

July retail and foodservice sales rose 0.7% to $696.35 billion (seasonally adjusted) from $691.31 billion in revised data for June and were up 3.2% from updated figures for July 2022, the U.S. Census Bureau reported in advance estimates released Tuesday.

Retail trade sales—excluding motor vehicles, parts stores, gas stations and repair shops—also showed increased gains, up 0.6% month over month to $605.21 billion (seasonally adjusted) and rising 2% over 12 months.

The July results compared with upticks of 0.3% monthly and 1.6% annually for June retail and foodservice sales and 0.2% monthly and 0.5% year over year for June retail trade sales.

Sales at grocery stores climbed 0.8% to $73.72 billion (seasonally adjusted) in July from $73.15 billion in updated numbers for June, when sales fell 0.4% sequentially, according to the Census Bureau. July grocery retail sales grew 2.3% from a year ago versus a 1% annual gain in June.

At all food and beverage stores, sales also increased 0.8% monthly, to $82.15 billion from $81.49 billion, yet advanced 2.5% over 12 months. The Census Bureau’s revised data for June showed a 0.4% decrease month to month and a 1.3% uptick year over year for the segment.

From U.S. Census Bureau

Inflation eases, but economic picture stays iffy for consumers

“Retail sales jumped in July amid cooling inflation for core goods and continued growth in real incomes. While consumers have largely prioritized services purchases in recent months, summer sales likely encouraged more spending online and at stores, particularly for back-to-school categories,” Kayla Bruun, economic analyst at data intelligence firm Morning Consult, said in an email. “However, U.S. consumers are facing stiffer headwinds in the coming months, as cooling wage growth, higher interest rates on rising credit balances, resumption of student loan repayments and the prospect of resurgent inflation for certain categories threaten to more tightly pinch household budgets.”

Indeed, inflation remained stable for July, with the Consumer Price Index (CPI) up 0.2% monthly and 3.2% year over year versus increases of 0.2% sequentially and 3% yearly in June. The food-at-home CPI was up 3.6% annually in July, down from 4.7% in June, yet grocery prices ticked up 0.3% monthly after being flat sequentially for June.

“Today’s retail sales report exceeded expectations and reflects positive momentum in consumer spending,” according to Claire Tassin, retail and e-commerce analyst at Morning Consult. “Online retail is a bright spot in today’s report, up 1.9% from June and 10.3% from a year ago. While inflation is moderating, shoppers are still taking advantage of online tools that facilitate price comparisons and find the best deals.”

Naveen Jaggi, president of retail advisory services at commercial real estate firm Jones Lang LaSalle (JLL), noted that July’s retail sales rise showed consumers’ resilience, as they continued to make discretionary purchases.

“With inflation growth softening and consecutive months of growing sales, we expected a moderate sales growth in July, particularly as we wrap up the back-to-school shopping season,” Jaggi commented.

Both the Census Bureau and NRF tallied double-digit annual growth for online retail sales in July. / Photo: Shutterstock

Retailer promotions prove effective

On Tuesday, the National Retail Federation (NRF) reported a 1% monthly increase (seasonally adjusted) and 3.8% annual growth (unadjusted) for U.S. retail sales in July, compared with increases of 0.4% monthly and a 3.3% over 12 months for June.

NRF’s estimate focuses on core retail, excluding automobile dealers, gas stations and restaurants. The retail trade group said July sales climbed 3.9% year over year (unadjusted) on a three-month moving average and rose 4% for the year to date.

“Retail sales growth has been slowing, but July got a midsummer boost from special deal days offered by multiple retailers,” NRF Chief Economist Jack Kleinhenz said in a statement. “Households had a positive response, and the pace of sales was clearly helped, more than doubling the previous monthly gain. The data shows the ongoing resilience in consumer spending and how it is fueling the overall economy. It’s worth noting that the strong year-over-year gain came partly because sales accelerated this July but were decelerating at the same time last year.”

Five of nine retail categories tracked by NRF posted 12-month sales increases in July, including grocery and beverage stores, health and personal care stores (including drug stores), general merchandise stores, online stores, and apparel and accessories stores, with gains of 0.9% (apparel and accessories) to 11.8% (online stores). Sales declined on a yearly basis at sporting goods stores (-0.5%), building materials and garden supply stores (-3.5%), electronics and appliance stores (-3.5%), and furniture and home furnishing stores (-7.6%).

On a monthly basis, July retail sales climbed in seven segments: grocery and beverage stores, health and personal care stores (including drug stores), general merchandise stores, online stores, apparel and accessories stores, sporting goods stores and , building materials and garden supply stores. Sequential increases ranged from 0.7% (building materials/garden supply stores) to 1.9% (online stores). Only electronics/appliance stores (-1.3%) and furniture/home furnishings stores (-1.8%) had monthly sales decreases.

Grocery and beverage store sales rose 0.8% month to month seasonally adjusted in July and 1.5% unadjusted annually, NRF said. Among other retail categories in the food, drug and mass channel, July sales edged up 0.7% month over month seasonally adjusted and grew 8.3% unadjusted year over year for health and personal care stores (including drug stores), while general merchandise stores saw gains of 0.8% month over month seasonally adjusted and a 1.6% unadjusted year over year.

“July retail sales show consumers continue to drive the economy through this period of economic pressure with robust spending supported by steady job growth and wage gains,” NRF President and CEO Matthew Shay stated. “Retailers remain focused on providing essential items at competitive prices for families and students as we approach the end of an expected record back-to-class shopping season.”