Welcome to Fed’s New World of Inflation.
By Wolf Richter for WOLF STREET.
Retail sales rose by 0.6% in June from May, according to the Commerce Department today. But over the same period, prices for food bought at the store rose by 0.8%; prices at restaurants, delis, cafeterias, etc. rose by 0.7%; for gasoline by 2.5%, and for durable goods such as appliances, electronics, furniture, cars, etc., by 3.5% in just one month! These are the categories that make up retail sales.
And these whopping price increases in June outran the increase in retail sales in June, and they outran retail sales for the entire second quarter, indicating that consumers paid more to get less. Welcome to the Fed’s New World of inflation.
Retail sales in June rose to $621 billion (seasonally adjusted), but after the 1.7% drop in May, remain below March and April:
New & used auto dealers and parts stores: Sales fell 2.0% in June, to $132 billion (seasonally adjusted), the second month in a row of declines from the historic WTF spike in March and April. Sales fell despite colossal price increases:
These colossal price increases showed up in the CPI for used vehicles which spiked by a previously unimaginable 10.5% in June and by an equally unimaginable 45% year-over-year; and in the CPI for new vehicles that jumped by 1.8% in June, as people bought far fewer vehicles but paid out of their nose for them.
People who are trying to buy under these conditions are begging to get screwed. Just say no. Most people can delay by a year or more the purchase of a vehicle because they can just keep driving what they have, which is what they did during the Financial Crisis, when auto sales collapsed for a couple of years as people went on buyers’ strike. We can now see the first few qualms building up at buying cars and trucks at these crazy prices.
In terms of the number of vehicles, used vehicle retail sales fell by 2.7% in June from May (seasonally adjusted) and were down 7.8% year-over-year. And sales of new cars and trucks plunged by 14% in June from May (seasonally adjusted):
The retailer segments by magnitude.
Auto dealers and parts stores are by far the largest segment in dollar-sales terms, accounting for about 21% of total retail sales (black line). Nonstore retailers, which is mostly ecommerce, have jumped 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 stores (such as Walmart), and building material and garden supply stores (such as Home Depot), followed by the rest:
Ecommerce and other “non-store retailers”: Sales rose 1.2% in June from May, to $88 billion, seasonally adjusted. Compared to June 2019, sales jumped by 31%. This includes ecommerce sales by pure…
Read More: Americans Pay More to Get Less: Retail Sales Outrun by Inflation