Retail Sales Cease Their Decline in April, But Inflation Wipes Out Gains

By at 16 May, 2023, 6:52 pm

by Raymond J. Keating – 

Retail and food services sales had declined in both February and March. But that mini-streak of negatives was broken in April, according to the latest report from the U.S. Census Bureau. However, the news regarding April wasn’t as good as the initial look might suggest.

Retail and food services sales had declined by 0.7 percent in February, and again by 0.7 percent in March. But then we saw a gain of 0.4 percent in April versus the previous month.

Compared to a year earlier, sales grew by only 1.6 percent.

Source: Federal Reserve Bank of St. Louis, FRED

When taking in this data, we need to understand that these are in nominal dollars. That is, they aren’t adjust for inflation. When we bring inflation into the mix, the story becomes far worse.

Inflation for April, as measured by the Consumer Price Index, registered 0.4 percent. That effectively wipes out the gain in sales made in April.

In addition, the declines in February and March worsen given that inflation ran at 0.4 percent in February and 0.1 percent in March.

In fact, over the past five months, after factoring inflation into the equation, retail sales have declined in four months and were flat in one.

Finally, looking over the past year, from April 2022 to April 2023, retail and food services sales increased by 1.6 percent. But that gain turns into a decline in real terms, with inflation registering 4.9 percent over the same period.

None of this bodes well for the economy, of course, and for small business. Keep in mind that retail trade is largely about small businesses, with 98.4 percent of employer firms having fewer than 100 employees, according to the latest Census Bureau data. We can hope, in terms of sales, that inflation will continue to come down and we’ll start to see a positive streak of real gains develop.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest book is The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist.


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