What consumer behavior in the age of inflation should we expect? – RetailWire

March 17, 2022

Retail sales in February rose 17.6% year-on-year and 0.2% from January, according to the US Census Bureau. January’s monthly gain was also revised up to 4.9%.

The gains demonstrate continued strength in consumer spending, although there are signs that inflation could prompt some to delay purchases or opt for cheaper alternatives.

Rising food and fuel prices spurred February’s dollar sales gain, but unit sales are a different story. The NPD Group found that year-over-year sales of apparel, footwear, sports equipment and toys fell between December 26 and March 5.

“The price sensitivity is starting to kick in,” said Field Marshal Cohen, the NPD’s chief retail sector adviser. The Wall Street Journal. “There is a threshold that consumers do not want to cross.”

“With the highest levels in 40 years, there is no doubt that the continued rise in inflation is hitting household purchasing power and likely dampening spending,” said Jack Kleinhenz, chief economist at the National. Retail Federation, in a statement. declaration. “We shouldn’t be surprised by the slower pace of sales given that buying had surged in January and the upward revisions 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.

Earlier this week, NRF predicted that retail sales, excluding autos, would increase this year between 6% and 8%. The trade group expects inflation to remain higher than expected and does not see a “cooling off” until sometime next year when the Federal Reserve hits its 2% rate target.

The side effects of Russia’s attack on Ukraine remains a wildcard in forecasts and some, like Joel Prakken, cChief U.S. Economist and Co-Head of U.S. Economics, IHS Markit, expects the impact to be more negative than NRF.

Prakken, who attended NRF’s “State of Retail and the Consumer” event on Tuesday, said his company’s “initial analysis of the fallout from Russia’s invasion of Ukraine…implies clearly [a] a much higher increase, much higher gas prices, much higher food prices, slower economic growth, financial uncertainties, all of which caused us all to cut by about half a percentage point our baseline forecast for the Q4-Q4 US growth measure all the way up to 2.4.

QUESTIONS FOR DISCUSSION: Which categories are most exposed to rising inflation? How do you think retailers will react to lower unit sales?


“Consumers will not all do the same thing and each category will be impacted differently.”


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