Retail sales fell in November, with spending on even traditionally popular holiday gift categories like clothing and sporting goods falling, a sign that high prices for essentials like food are affecting how much people have left in their budgets for more discretionary items.
US retail sales fell 0.6 percent in November from October, the US Department of Commerce reports said on Thursday. The figure does not take into account price changes.
Spending increased in some areas from the previous month, including at food and beverage retailers and health and personal care stores. But the report shows how inflation has changed the way consumers approach the holiday season. For example, Americans are reducing the number of people they give gifts to, according to data from KPMG.
“Those are some signs that those core categories are just taking up a fair chunk of our budget and there’s only so much we can do during the holiday season,” said Matt Kramer, KPMG’s national consumer and retail sector leader.
November marked the official start of the Christmas shopping season. Nearly 200 million Americans shopped over Thanksgiving weekend, including Black Friday and Cyber Monday, according to the National Retail Federation, an industry association. The average amount shoppers spent that weekend was more than $325, the group said, an 8 percent increase from last year.
In reality, however, the holiday shopping season started long before Black Friday. In recent months, retailers have advertised more discounts to entice people to spend. Many experts say the earlier-than-usual deals were reflected in October’s retail sales, when the sales increased by 1.3 percent compared to September.
“It’s definitely a different story than the October numbers,” Mr Kramer said of the November numbers.
“The ability to spend is affected by inflation and they try to change that mix in their basket to make up the difference between what they earn and take home each month and what things cost,” said Matt Shay, president and CEO from NRF officer.
Mr Shay noted that spending was supported by a strong labor market, rising wages and “some households are increasingly going into debt or drawing on savings to cover those monthly cost increases.”
Still, the question is what the demand will look like in December. Since retailers used the sales to entice shoppers to begin their holiday spending while many of them were still carrying Halloween merchandise, consumers may be less inclined to spend in the weeks leading up to Christmas.
“I think it’s still going to be a solid year,” said Mr. Kramer. “I do think the consumers will be out, but there’s only so much budget to go around and there won’t be huge jumps like we saw last year.”