March Retail Sales Wrap Solid First Quarter for Consumer Spending

The old adage goes, “March comes in like a lion and goes out like a lamb.” However, for consumer spending, it looks like March came in like a lion and stayed there. Both the U.S. Department of Commerce and PYMNTS intelligence data showed consumers spending more despite inflation and general unease in the macroeconomic outlook.

According to the U.S. Department of Commerce, on a seasonally adjusted basis, retail sales rose by 1.7% year over year. The report follows last week’s release of the monthly consumer price index (CPI), which accelerated 0.4%, overall in March and 3.5% on an annual pace, faster than expected.

When digging deeper into the product categories, we see that most categories have been either growing or shrinking each month. After seeing a 5.6% bump in February, we saw a 1.7% more modest increase for March driven by gains and losses in competing sectors.

By sector, we see solid increases in both grocery and clothing stores, increasing by 3.5% and 3.1%, respectively. We also saw a big spike for general merchandise, which included large multi-product stores, department stores, warehouse clubs, and outlets, with a 9.6% jump year over year. In addition, eCommerce sales increased by 5.6%, and more importantly, these segments have seen gains in the last several months.  

However, we also tend to see consistent pullbacks in other sectors, including Furniture and home furnishings, building materials, and sporting goods, which saw year-over-year declines of 8.0%, 7.3%, and 4.0%, respectively. PYMNTS intelligence analysis also showed that these declines have persisted through the first quarter of the year.

The PYMNTS intelligence analysis also found significant differences between retail inflation and overall inflation. Most recent CPI data shows while the Consumer Price Index is not growing as fast as it was a year ago, it is still increasing at a concerning 3.5% rate. However, retail inflation is significantly lower and has been about zero over the last several months. According to PYMNTS, retail inflation experienced greater levels during the inflationary period in 2021 and 2022, but since 2022, retail inflation has been below overall inflation.

However, the net cumulative effect has been fairly consistent since the pandemic. Total retail inflation since January 2020 comes in at 24.2% compared to 21.5% for the CPI over the same period.