US retail sales weakest in over a year in July

US retail sales weakened significantly in July, according to government estimates released on Friday, falling to their weakest level in over a year. The Commerce Department reported that total sales dropped 0.6% from the previous month, reaching a total of US$763.6 billion. However, when auto dealers and gasoline stations were excluded from the calculation, sales declined by a mere 0.2%.

This was a stark contrast to the analysts' expectations of a 0.1% increase in sales for the month. Experts are closely monitoring the health of US consumers, as they navigate through inflation and the strain of using up their savings. Inflation has been persistently high due to soaring gasoline prices, primarily driven by the US-Israel strikes on Iran, which have led to Tehran nearly sealing the Strait of Hormuz, a crucial global energy transit route.

The conflict has caused a surge in costs, impacting sales at gasoline stations. Although gasoline prices have eased in July, they continue to remain higher compared to pre-war levels. Among the various sectors, motor vehicle and parts dealers experienced a 1.8% decline, while electronics stores saw a 0.5% decrease. Additionally, sales at gasoline stations plummeted by 0.9%, while online stores saw the most significant drop of 2%. Despite this downturn, US retail sales remain 5% higher than the same period a year ago.