Mastercard Sees July Retail Sales Expand 11 Percent

According to Mastercard SpendingPulse, which measures in-store and online retail sales across all forms of payment, US retail spending excluding automotive increased 11.2 percent year-over-year in July, while retail sales excluding automotive and gas rose 9.0 percent.

Notably, e-commerce sales were up 11.7 percent YOY (year over year), a sharp increase after months of softer growth. Rising prices—particularly for necessities such as food and fuel—were a contributing factor, as Mastercard SpendingPulse reflects nominal spending and is not adjusted for inflation.

Spending increases in July outpaced monthly year-over-year growth experienced thus far in 2022, with demand and higher prices both contributing factors. Of note:

Consumers continue to spend, with inflation’s impact varying across sectors: Consumers continue to navigate high inflation as they spend on wants and needs. The Grocery sector, for instance, saw sales up +16.8 percent YOY in July due primarily to food price increases. On the other hand, Apparel (+16.6 percent) and Jewelry (+18.6 percent) sales saw strong demand-driven year-over-year growth, well outpacing sector-specific inflation.

E-commerce sales climb amid major promotional events: While in-store sales remain elevated, up +11.1 percent YOY/ +13.9 percent YO3Y, e-commerce posted its first month of double-digit sales growth (+11.7 percent YOY) since December . E-commerce is up nearly double pre-pandemic levels (+98.5 percent YO3Y). Online sales have ticked up since the beginning of June, although July’s major promotional events helped entice shoppers to splurge (and save) with online deals.

High season for vacation, with road-trippers seeing some relief at the pump: Travel remains a priority, with Lodging up 29.6 percent YOY and Airline sales up 13.3 percent YOY. Fuel & Convenience spending remains elevated (+32.3 percent YOY / +47.1 percent YO3Y), although the growth rate is down compared to June – reflecting price declines at the pump.

“The latest retail trends place an emphasis on consumer choice and passion-driven spending – they’re hunting for deals, shopping across channels and ultimately still spending on experiences and goods that make them feel good,” said Steve Sadove, senior advisor for Mastercard and former CEO and chairman of Saks Incorporated. “As retailers grapple with excess inventory and supply chain constraints, it’s likely that the promotional activity seen in July will continue to be an important strategy for retailers.”

Mastercard Economics Institute: Housing market cooldown slows sales of home-related goods

After heating up during the pandemic, the US housing market has cooled considerably since the beginning of 2022, influencing consumer spending on home-related goods. Each time a home changes hands, there is usually a significant amount of spending as consumers outfit their new abode. But with significant interest rate hikes resulting in fewer homes sold, this has been translating to a natural decline in home-related purchases, as reflected in this month’s SpendingPulse. Sales growth for the Home Improvement (+2.9 percent) and Furniture & Furnishings sectors (+5.0 percent) has slowed.

“Consumers’ purchasing power has been strained by higher prices, particularly for the most fundamental needs-based categories like food and energy,” said Michelle Meyer, US chief economist, Mastercard Economics Institute. “Thus far, nominal spending remains strong as consumers cope with high price inflation. As we continue to look at the strength of the consumer, we will be keenly focused on trends surrounding employment and wage growth.”

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