Retail sales held steady in September, the Census Bureau reported on Friday.
The number, not adjusted for inflation, compares to a 0.4% increase in August, which was revised upward from the earlier estimate of 0.3%.
Year over year, retail sales increased 8.2%.
Leading the rise were sales of groceries, clothing and health and personal care items.
Analysts had expected sales to increase by 0.2%.
Retail analysts say that consumers have been switching their spending habits as inflation, now running at an annual rate of 8.2%, takes a bigger bite out of everyday purchases like food, gasoline and medicine.
The Federal Reserve, meanwhile, has been driving up the cost of credit, with mortgage rates now double what they were a year ago.
Surveys by private firms who track spending through credit card sales and point of service terminals show a somewhat different picture than the official government data.
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“On a yearly basis, our data shows spending is up over 8% which tells us the economy is recovering, although it is difficult to ascertain which areas are truly rebounding faster than others as there has never been a more fragmented consumer landscape, and broad economic indicators are often no longer enough to truly understand changing consumer behaviors across segments,” said Jonathan Silver, CEO of Affinity Solutions, which tracks credit card spending by consumers.
“We saw a slight drop in spending among the highest income levels which went from 18% yoy in August to 16% in September,” Silver added. “Simultaneously, we saw year-over-year spending in September on discretionary items decline in categories like electronics & appliances (-10%), furniture and home furnishings (-3%), building material, gardening equipment and supplies (-8%), and clothing (2%), as compared to August year-over-year spending.”
Piyush Patel, chief strategy officer of Algolia, a search engine that helps major brands target their customers, said that consumers have been shopping earlier in response to discounting by retailers.
“Coming out of the pandemic, retailers stocked up significantly to meet record-breaking demand,” Patel said. “Now that the demand is waning, retailers experience a glut of inventory, and the supply and demand pendulum has swung in consumers’ favor. To clear out packed warehouses, as early as this summer, we’ve seen many big-name retailers launch unexpected sales, offering some relief for shoppers slammed by high inflation.”
“And when retailers start the holidays early, consumers follow suit,” he added. “Therefore, we’ve seen a lot of people kicking off holiday shopping early this year, some in fear that retailers may hike up prices as the end of the year closes in.”
That sentiment is echoed by data from Radial, an e-commerce fulfillment company.
“This year, 41% of respondents plan to begin holiday shopping before Thanksgiving, while in 2020, 41% of respondents did not plan on shopping early and in 2021, 57% of consumers planned to shop earlier compared to 2020,” according to the firm’s latest surveys.
And Adobe, which released its online shopping forecast this week, forecast the 2022 holiday season to show 2.5% growth from last year, with sales hitting $209.7 billion from Nov. 1 to Dec. 31.
But Adobe cautioned that the 2022 holiday season “will also be impacted by an uncertain economic environment, as shoppers contend with elevated prices offline (food, gas, housing) and the rising cost of borrowing.”