Retail sales data from the U.S. Census Bureau show that core retail spending continued to rise in May, even as overall retail sales slipped.
The figures suggest American consumers are managing in the face of trade policy uncertainty, though economists warn that inflation tied to tariffs could take hold later in the year.
Steady growth in core retail despite falling overall sales
According to the Census Bureau, overall retail sales dropped by 0.9% in May compared to April, seasonally adjusted. However, sales were still 3.3% higher than in May 2024, unadjusted for seasonal variation.
Core retail sales — excluding vehicles, fuel, and food services — rose by 0.1% month over month and climbed 3.9% year over year.
The National Retail Federation (NRF), which tracks these core categories to gauge consumer spending on discretionary goods, reported a 4.4% year-over-year increase based on a three-month moving average.
Sales in the first five months of 2025 were also up 3.9% compared to the same period in 2024.
Tariff effects not yet fully reflected in spending patterns
NRF Chief Economist Jack Kleinhenz noted that the current growth mirrors last year’s pace and is supported by rising wages and an improved stock market. However, he warned that inflation linked to tariffs on imported goods could start to impact household budgets in the coming months.
“Consumers are seeing their way through the uncertainty with trade policies,” Kleinhenz said, “but I expect the inflation associated with tariffs to be felt later this year. Consumers remain very price sensitive, and those costs are likely to weigh heavily on consumer budgets.”
Although consumers appear resilient for now, the long-term effects of trade tensions and price increases remain a concern for retailers and economists alike.
Retail monitor data shows slower growth in May
Separate data from the CNBC/NRF Retail Monitor, based on transaction data from Affinity Solutions, indicated that core retail sales rose by 0.23% month over month in May and 4.2% year over year.
This represents a slowdown from April’s figures, which showed growth of 0.9% month over month and 7.11% year over year.
The trend suggests that while consumer demand remains strong, spending may begin to cool as households adjust to potential cost increases and economic uncertainty.
The NRF continues to monitor monthly retail sales data closely and provides annual forecasts, including for critical shopping periods like the holiday season.
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