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Welcome to the new world of Fed inflation.
By Wolf Richter for WOLF STREET.
Retail sales rose 0.6% in June from May, according to the Commerce Department today. But over the same period, prices for food purchased from stores rose 0.8%; the prices of restaurants, delicatessens, cafeterias, etc. increased by 0.7%; for gasoline by 2.5%, and for durable goods such as household appliances, electronics, furniture, cars, etc., by 3.5% in just one month! These are the categories that make up retail sales.
And those huge price increases in June outpaced the increase in retail sales in June, and they outpaced retail sales for the second quarter as a whole, indicating that consumers paid more for less. Welcome to the new world of Fed inflation.
Retail sales in June hit $ 621 billion (seasonally adjusted), but after falling 1.7% in May, they remain below March and April:
New and used car dealers and parts stores: Sales fell 2.0% in June, to $ 132 billion (seasonally adjusted), the second consecutive month of decline from the WTF’s all-time high in March and April. Sales fell despite colossal price increases:
These colossal price increases manifested themselves in the used vehicle CPI, which climbed a previously unimaginable 10.5% in June and an equally unimaginable 45% year-over-year; and in the CPI for new vehicles which jumped 1.8% in June as people bought far fewer vehicles but paid for them with their noses.
People trying to buy under these conditions beg to get fucked. Just say no. Most people can delay buying a vehicle for a year or more because they can just keep driving what they have, which they did during the financial crisis, when car sales collapsed for a few years as people went on strike from buyers. . We can now see the first qualms about buying cars and trucks at such crazy prices.
In terms of the number of vehicles, used vehicle retail sales were down 2.7% in June from May (seasonally adjusted) and 7.8% year over year. And sales of new cars and trucks plunged 14% in June from May (seasonally adjusted):
The retailer segments by order of magnitude.
Auto dealers and parts stores are by far the largest segment in terms of dollar sales, accounting for about 21% of total retail sales (black line). Non-store retailers, which are primarily e-commerce, have moved to second place during the pandemic (top red line). Grocery and beverage stores are in third place (green line), followed by bars, restaurants and other “food services and drinking places” (purple line), followed by general merchandise (like Walmart) and materials stores. construction and garden supplies. stores (like Home Depot), followed by the rest:
E-commerce and other “non-store retailers”: sales increased by 1.2% in June of May, to $ 88 billion, seasonally adjusted. Compared to June 2019, sales jumped 31%. This includes online sales by pure online retailers and by online operations of physical retailers, mail order sales, at street stalls, vending machines, etc.
Food and beverage stores: Sales increased 0.6% in June to $ 75 billion, as the CPI for food purchased from stores rose 0.8% – pay more to get less.
Working from home, not working at all, and starting small businesses outside the home have shifted some of the consumption from commercial buildings to households, and hence to supermarkets.
Restaurants and bars: sales increased by 2.3% in June to a new record of $ 71 billion, against a background of widespread price increases.
General merchandise stores: sales increased by 1.1% in June, to $ 56 billion, after two months of decline, and up 17% from June 2019. This segment includes physical stores of Walmart, Costco and Target; but not their online sales, which are included in “non-store retailers”:
Building material, garden supplies and equipment stores: Sales fell 1.6% in June, the third consecutive month of decline, to $ 39 billion, but was still up 25% from June 2019:
Gas stations: sales increased by 2.5% in June to $ 47 billion, with the average gasoline price also rising 2.5% in June, indicating that consumers bought roughly the same amount of gasoline, but paid for it more expensive. Gasoline prices are now at levels not seen since October 2014, when the oil crisis began, and sales at gas stations have followed. Sales at gas stations include all of the other products they sell, from motor oil sodas:
Clothing and accessories stores: sales increased 2.6% in June, to $ 26 billion, up 16% from April 2019:
Furniture and home furnishings stores: Sales fell 3.6% for the month, at $ 12 billion, but was up 19% from May 2019. The furniture and bedding CPI jumped 2.1% in April, 1.9% higher in May and 0.7% more in June for a combined three-month inflation of 4.7%. Over the same three-month period, sales were down 4.8%. In other words, consumers paid less to get much less:
Department stores: sales are up 5.9% for the month at $ 12 billion, and was up 7.1% from June 2019. That includes physical store sales of Macy’s, Kohl’s, JC Penney, etc., but not their online sales:
Sporting goods, hobby, book and music stores: Sales fell 1.7% for the month, to $ 9.4 billion, the third consecutive month of decline, after the peak in March. Compared to June 2019, sales are up 38%:
Electronics and appliance stores: sales increased by 3.3% for the month, and are up 2.1% from June 2019. Most consumers buy electronics and appliances online, a booming business, and sales in these physical stores have been declining for years , to a level where they are now lower than their current level. It was in 2005:
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