Retail sales rose just 0.2% in June, though stronger online purchases, vehicle sales and early back-to-school shopping could help support consumer spending through the summer.
By yourNEWS Media Newsroom
U.S. retail sales recorded their smallest monthly increase since January as consumers became more selective in June, even as vehicle purchases, online promotions and electronics sales provided pockets of strength.
Retail sales rose 0.2% last month after an upwardly revised 1% increase in May, according to Census Bureau data released July 16. The June result matched economists’ consensus forecast.
The slower increase suggested households were exercising greater caution as they faced renewed pressure from gasoline prices and uncertainty surrounding the broader economy.
Sales at motor vehicle and parts dealers rose 1.9%, matching a 1.9% increase among nonstore retailers, which include online merchants. Electronics and appliance stores also posted growth of nearly 1%.
Amazon Prime Day helped drive digital purchases, with industry analysts estimating that sales from the four-day promotional event would exceed $26 billion.
Other retail categories weakened. Sales at health and personal care stores fell 0.8%, while food and beverage store sales declined 0.2%.
Compared with a year earlier, retail sales increased 6.7% in June, slowing from an upwardly revised 7.3% annual gain in May.
The report showed that consumer demand remained positive but lost momentum after stronger spring spending.
Rising gasoline prices may be contributing to the slowdown. Global energy costs fell sharply beginning in early June before reversing course as concerns increased that the conflict involving Iran could intensify following the United States’ decision to reimpose a naval blockade.
The national average price for a gallon of gasoline rose roughly 10 cents over the past week to more than $3.94, increasing transportation costs for households.
When automotive services and gasoline were excluded, retail sales rose 0.4% in June, down from a 0.8% increase in May.
The retail sales control group, which excludes volatile categories including automobile dealerships, gasoline, office supplies and tobacco, increased 0.5%. That matched economists’ expectations but slowed from May’s upwardly revised 0.8% gain.
The control group is used in calculating consumer spending on goods in gross domestic product.
Bill Adams, chief U.S. economist at Fifth Third Commercial Bank, said the report supported the outlook for second-quarter economic growth because spending remained firm outside gasoline stations and prior monthly figures were revised upward.
“The report is constructive for second quarter real GDP,” Adams said in an emailed note to The Epoch Times. “Not only were sales solid outside of gas stations, revisions were positive too. Sales were marked up in April and May.”
The Atlanta Federal Reserve’s closely followed GDPNow model estimates that the economy expanded at a 1.3% annualized rate during the second quarter.
Consumer spending and business investment are expected to provide much of that growth.
Separate private-sector data suggested shoppers maintained greater momentum than the government retail figures alone indicated.
Combined credit and debit card spending increased more than 6% from a year earlier in June, the strongest annual growth rate in approximately four years, according to Bank of America.
“With gasoline prices falling, the increase in spending growth is almost entirely a discretionary story,” the bank’s economists wrote.
The bank’s analysis also found that wage and spending trends have become more similar across income groups, running counter to the K-shaped pattern of recent years in which higher-income households generally experienced stronger financial gains than lower-income families.
“In June, lower-income households’ after-tax wage growth rose above that of middle-income households,” the economists wrote. “Whether these trends persist into the second half of the year will hinge on whether underlying labor market momentum is sustained.”
Some of June’s spending growth may have been connected to the FIFA World Cup and major online retail promotions.
Cities hosting World Cup events experienced stronger spending gains than other U.S. cities, according to the private-sector data.
Retailers may receive another lift as families begin purchasing clothing, classroom supplies and electronics for the coming school year.
A National Retail Federation survey found that 62% of shoppers had already started back-to-school shopping.
That share was lower than the 67% reported last year but higher than the 55% recorded in 2024.
Affordability remains a major concern as households attempt to stretch their budgets, according to Mark Mathews, chief economist at the National Retail Federation.
“Shoppers are keeping value front and center as they look for ways to make their dollars go further,” Mathews said in a July 14 news release.
“Retailers are responding with a strong assortment of products, promotional events and more convenient shopping options, helping families find what they need while saving time and money.”
The survey found that 47% of shoppers intend to purchase only essential items initially and replenish school supplies as needed throughout the year.
Other consumers are delaying purchases while waiting for deeper discounts and additional promotions.
Families with children attending elementary, middle or high school expect to spend approximately $864 on back-to-school purchases this year, up slightly from $858 in 2025.
The combination of early school shopping, World Cup activity and promotional events could help support summer retail sales, though June’s modest increase showed consumers are becoming more deliberate about where and how they spend.
Household demand continues to contribute to economic growth, but higher gasoline costs, slower monthly sales and a renewed focus on affordability suggest consumers are paying closer attention to prices and prioritizing essential purchases.
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