Retail sales see underwhelming rise in February

Retail sales rose 0.2% in February, the Commerce Department reported on Monday, coming in half a point below what economists had predicted. The slight bump comes after a revised 1.2% sales decline in January.

The Consumer Price Index increased at the same rate, 0.2%, in February as inflation cooled slightly.

National Retail Federation chief economist Jack Kleinhenz said in a statement that the data reflects consumers who are “apprehensive and carefully navigating lingering inflation and turmoil related to changing economic policies.”

“Regardless of the softer spending, consumer fundamentals remain healthy and intact so far, supported by low unemployment, steady income growth, and other household finances,” he said. “American shoppers will likely continue to spend as long as unemployment remains low and job growth continues.”

Retail trade sales, which excludes motor vehicles, parts, and gas stations, were up 0.5%. Across categories, food and beverage stores saw a 0.4% uptick, and health and personal care store sales increased 1.7%. Nonstore retailers, largely made up of online sales, saw the largest monthly increase of 2.4%. Sectors seeing sales declines included electronics and appliance stores (-0.3%), miscellaneous store retailers (-0.3%), clothing stores (-0.6%), restaurants and bars (-1.5%), and department stores (-1.7%).

As consumer confidence and sentiment continue to decline, with sentiment this month hitting the lowest point since November 2022, consumer spending habits have shifted. Circana on Monday also reported that February saw week-to-week fluctuations in consumer’s retail sales demand, a result of the “paralyzing effects of economic uncertainty,” Marshal Cohen, chief retail industry advisor for Circana, said in a statement.

“On top of the existing concerns around inflation and the cost of goods, consumers are being inundated by headwinds that are creating pockets of behavior changes that have yet to impact the big picture,” he said, adding that “every retailer and manufacturer must remain aware of the activity both inside and outside their product and consumer sweet spots, and be prepared to make adjustments that will both calm and compel the consumer.”