U.S. retail sales fell 0.6% in July from June, the steepest monthly drop in more than a year, the Commerce Department's Census Bureau reported August 14. Sales still rose 5.0% from a year earlier. Two days earlier, the Bureau of Labor Statistics had reported annual inflation held at 3.4% in July — meaning retail spending growth continued to outrun price increases over the past twelve months even as the monthly reading fell.
What drove the July retail sales decline?
Motor vehicle and parts sales led the pullback, down 1.8% for the month, while gas station receipts fell 0.9% and online and other non-store sales dropped 2.2% after a June boosted by Amazon Prime Day spending, according to Census Bureau data reported by PBS NewsHour. Clothing and accessories, furniture, building materials and restaurants all posted gains, with restaurant spending up 0.5%.
Heather Long, chief economist at Navy Federal Credit Union, told PBS NewsHour that "American consumers are showing signs of fatigue." Bernard Yaros of Oxford Economics said the reading "warrant[s] a downgrade to the spending forecast," but added it would be "premature to write off the consumer." PBS attributed part of the drop to the fading effect of spring tax refunds that had lifted April and May spending, plus a pullback after World Cup-related purchases and a rise in gasoline prices to $4.08 a gallon, up 92 cents from a year earlier.
How does retail spending compare with inflation?
Retail sales excluding autos and gas — a gauge closer to core consumer demand — rose 4.8% year over year, according to the Census Bureau's advance monthly retail trade report. Core CPI, which excludes food and energy, rose 2.5% over the same twelve months per the Bureau of Labor Statistics. That leaves nominal spending growth in that category running about 2.3 percentage points ahead of underlying price growth — a gap the two releases don't state directly but that emerges from reading them side by side.
On a headline basis, total retail sales rose 5.0% year over year against 3.4% headline CPI inflation, a gap of roughly 1.6 percentage points. Neither agency adjusts retail sales figures for price changes, so the comparison is nominal-to-nominal and does not by itself measure real purchasing power; it shows only that dollar volumes moving through registers grew faster than the broad price index over the same period.
| Measure | Month-over-month | Year-over-year | Source |
|---|---|---|---|
| Total retail sales | -0.6% | +5.0% | Census Bureau |
| Retail sales ex-autos, ex-gas | -0.2% | +4.8% | Census Bureau |
| CPI, all items | +0.1% | +3.4% | BLS |
| Core CPI (ex-food, ex-energy) | +0.2% | +2.5% | BLS |
Chart: The Daily News 24 · Data: U.S. Census Bureau; U.S. Bureau of Labor Statistics
What happened with prices in July?
The all-items CPI rose 0.1% in July after a June decline, the Bureau of Labor Statistics reported. Shelter costs rose 0.1% for the month and accounted for roughly two-thirds of the total monthly increase, the bureau said. Energy prices fell 1.5% in July but remained up 14.7% from a year earlier, the widest gap among the major CPI components. Food prices rose 0.1% for the month and 3.0% year over year.
Which retail categories gained or lost the most?
Among the categories PBS NewsHour reported from the Census data, motor vehicles and parts posted the largest monthly decline at 1.8%, followed by online and non-store retailers at 2.2% and gasoline stations at 0.9%. Electronics and appliance stores fell 0.5%. On the other side, building materials and garden supply stores, furniture stores, and clothing and accessories stores all recorded gains, and food services and drinking places — restaurants and bars — rose 0.5%, one of the few categories to post a monthly increase.
What comes next?
The Census Bureau is scheduled to release August 2026 retail sales data on September 16, and the next CPI report will cover August prices. Oxford Economics' Yaros said the July retail report would push his firm to lower its spending forecast, without specifying a new figure in the reporting reviewed for this article. The Daily News 24 does not forecast future retail sales, prices, or interest-rate moves; any forward-looking figures cited here belong to the named institution and are dated accordingly.
Frequently Asked Questions
Did retail sales fall or rise in July 2026?
They fell 0.6% from June, the largest monthly decline in more than a year, per the Census Bureau. On an annual basis, sales were still up 5.0% from July 2025.
What is core CPI and how did it change in July?
Core CPI is the Consumer Price Index excluding food and energy, used to track underlying inflation trends. It rose 0.2% in July and 2.5% over the prior twelve months, according to the Bureau of Labor Statistics.
Why did retail sales drop even though inflation stayed moderate?
PBS NewsHour reported the decline followed the fading boost from spring tax refunds, a pullback after World Cup and Prime Day-related purchases, and gasoline prices that rose 92 cents a gallon from a year earlier.
Is retail sales growth outpacing inflation?
On a nominal basis, yes: total retail sales rose 5.0% year over year versus 3.4% headline CPI inflation, a gap of about 1.6 percentage points. Neither figure is inflation-adjusted, so this compares dollar totals, not purchasing power.
When is the next retail sales report due?
The Census Bureau is scheduled to release August 2026 retail sales figures on September 16, 2026, at 8:30 a.m. Eastern.
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For more context, read How the Consumer Price Index Is Actually Calculated.