According to Mastercard SpendingPulse, which measures in-store and online retail sales for all forms of payment, U.S. non-auto retail spending rose 11.2% year-on-year in July, while retail sales, excluding autos and gasoline, increased by 9.0%. .
Notably, e-commerce sales rose 11.7% year-over-year (YOY), a strong increase after months of weaker growth. Rising prices, particularly for food and fuel, were a contributing factor, as Mastercard SpendingPulse reflects nominal spending and is not adjusted for inflation.
Spending increases in July outpaced monthly year-on-year growth so far in 2022, with demand and rising prices contributing factors. To note :
- Consumers continue to face high inflation as they spend on their wants and needs. The grocery sector saw its sales increase by +16.8% year-on-year in July, mainly due to higher food prices. Sales of clothing (+16.6%) and jewelry (+18.6%) recorded year-on-year growth driven by demand above sectoral inflation.
- While in-store sales remain strong, up +11.1% YoY/+13.9% YoY, e-commerce recorded its first month of double-digit growth (+11.7% year-on-year) since December. E-commerce nearly doubled from pre-pandemic levels (+98.5% year-on-year). Online sales have increased since the beginning of June, although major promotional events in July encouraged consumers to spend and save with online offers.
- Travel remains a priority, with accommodation up 29.6% year-on-year and airline sales up 13.3% year-on-year. Spending on fuel and amenities remains high (+32.3% YoY / +47.1% YoY), although the growth rate is down from June, reflecting lower prices at the pump .
“The latest retail trends are emphasizing consumer choice and passion-driven spending. They search for deals, shop across channels, and ultimately continue to spend on experiences and goods that make them feel good,” said Steve Sadove, Senior Advisor to Mastercard and former CEO and Chairman of Saks Inc. “As retailers grapple with excess inventory and supply chain constraints, it is likely that the promotional activity seen in July will continue to be an important strategy for retailers.
Mastercard Institute of Economics
(the slowdown in the housing market is slowing sales of home-related goods)
After warming up during the pandemic, the US housing market has cooled since the start of 2022, influencing consumer spending on home-related goods. Every time a house sells there is usually a significant amount of expense as consumers outfit their homes, but with significant increases in interest rates causing fewer homes sold, it has reflected in a natural decline in home-related purchases, as evidenced by this SpendingPulse of the month. Sales growth in the home improvement (+2.9%) and furniture and furnishings (+5.0%) sectors slowed.
“Consumer purchasing power has been strained by rising prices, especially for the most basic needs-based categories like food and energy,” said Michelle Meyer, chief economist. in the United States, Mastercard Economics Institute. “Thus far, nominal spending remains strong as consumers face high price inflation. As we continue to examine consumer strength, we will focus on trends surrounding employment growth and wages.
Photo courtesy PODS