The slower rate of growth reflects the changing economic conditions, as well as Russia's invasion of Ukraine that erupted during the month. However, compared to February 2021, retail sales were up a whopping 17.6%, according to the latest data from the U.S. Census Bureau.
“Retail sales data continues to show impressive consumer resilience,” Matthew Shay, president and CEO of the National Retail Federation (NRF), said in a statement about the Census Bureau's February data. “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 sales report underscores that inflation and and higher prices may be having an impact on shopper behavior. Inflation reached a nearly 40-year high at the end of 2021. January 2022 also saw higher retail sales––up 4.9% compared to December 2021.
“February retail sales reflected continued strong labor market conditions, but were certainly affected by higher consumer prices,” NRF Chief Economist Jack Kleinhenz said. “With the highest levels in 40 years, there is no doubt continued increases in inflation are hitting household purchasing power and likely restraining spending. 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.”
In addition, the huge jump in sales compared to last year was largely expected.
“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,” Kleinhenz said. “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.”
Worse still, by NRF’s data analysis, which excludes automobile dealers, gasoline stations and restaurants to focus on core retail, February retail sales were actually down 1% from January, but up 13% year over year.
The findings come just a day after NRF predicted retail sales will reach between $4.86 trillion and $4.95 trillion this year, with growth between 6% and 8% over 2021. Despite all the economic headwinds consumers and retailers are facing for the rest of this year, NRF is still bullish on high sales growth.
“Retailers are nimble and are dedicated to serving their customers with great experiences, great products and services at the best possible prices they can,” Shay said. “Our outlook remains constructive, with solid retail sales growth for all of 2022 increasing by 6% to 8%. Consumer financial health can continue if current pressures in the economy are moderated by sound policy decisions that do not compound the challenges our economy is already facing.”