Retail sales + 1.5%. But volumes are falling.

Retail sales in June rose .2% month-over-month. Even the bulletproof food and drinking places category of spending barely increased from May to June. 

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Turning down the volume
Welcome to the Know the Difference Minute for Tuesday, July 18th.
Retail sales in June rose .2% month-over-month. Even the bulletproof food and drinking places category of spending barely increased from May to June.
Relative to a year ago, total retail sales are up 1.5%. That might sound fine, but when inflation is above 3% it means that volumes are falling. That’s not great.
When looking at sales, analysts try to tease out whether it is because of quantities, prices, or both. Over the last year, it’s been because of price increases more than quantities.
The net effect between sales and costs gives net income. That is a complicated, and often awkward, dance between volumes, input costs, and selling prices.
Inflation affects both selling prices, but also input costs. The difference is margins. Margins may still be stretched.
If consumers are turning down the volume, earnings could stay under pressure.
I’m Brian Jacobsen, Chief Economist at Annex Wealth Management. That is your Know the Difference Minute