Consumers are still supporting retail in droves, but the rapid rise of inflation is starting to cool things off a bit.
Both the U.S. Census Bureau and the National Retail Federation (NRF) released February retail sales numbers this week that reflect continued double-digit year-over-year growth. The organizations use differing methodologies in their calculations, with the Census Bureau reporting a 17.6% spike versus February of last year and the NRF reporting a 13% gain. Both organizations noted that month-over-month growth slowed to the low single digits.
“Retail sales data continues to show impressive consumer resilience,” says NRF President and CEO Matthew Shay. “Despite all that’s been thrown at them including inflation, supply chain constraints, market volatility, and significant geopolitical events, consumers remain able and willing to spend.”
The challenges being thrown at consumers are becoming a concern, as noted by NRF Chief Economist Jack Kleinhenz.
“With the highest levels in 40 years, there is no doubt continued increases in inflation are hitting household purchasing power and likely restraining spending,” Kleinhenz says. “We shouldn’t be surprised by the slower pace of sales given that purchases had surged in January and the upward revisions made to those numbers. And the double-digit year-over-year increase was expected given that much of the economy was still in stay-at-home mode a year earlier. February’s sales are another sign of the economy’s resilience, but the conflict in Europe is an increasing headwind that could dampen spending around the globe.”
NRF believes that overall retail sales will grow 6-8% this year.
As the first quarter winds to a close, the toy industry outlook should begin to emerge within the next month.
