INFLATION’S IMPACT ON RETAIL SALES GROWTH – June 2025
Inflation seems simple – just compare this year’s prices to the same time last year. In fact, it is more complex. The most important thing to remember is that it is cumulative so even when the YOY rate slows, it can cause a range of issues – selling less product and even a drop in revenue. One impact that is often ignored is slowed $ growth. That is the focus of this report. In order to give an accurate reading of the situation we will include charts for the Big Retail Groups and the “Advance” Relevant Retail Channels. We will also include separate charts for Monthly & Ytd data to better show trends.
First the Jan>Jun Monthly Report for Big Groups (100% of U.S. Retail $)
We also included the Y/E numbers for 2024, both actual & average, to show our 1st goal – Beat these lifts!
There are things that immediately stand out. One is expected – a BAD February. It is often the low point of the Retail year. In 2025, the lift vs 24 was -78% below avg for Relevant Retail, but Total and all other groups had drops. A big positive is January. Gas Stations had their only monthly lift in 25. It was below avg but all other groups had above avg lifts. Now April, 1 drop but 4 above avg lifts, including Total. In May>Jun, the situation worsened. Still 1 drop, but only 1 above avg lift (May: Restaurants; Jun: Auto) and 3 below avg. Total & Relevant were a little less below avg in June.
Restaurants – The February drop was small and the Mar>May lifts were above avg. Those lifts were 6+%, peaking at 7.5% in May, 34.8% above average. Things worsened in June as their lift slowed to +5.4%, -3.8% below average.
Auto – Until May>Jun, their pattern was the same as Restaurants but with bigger changes, especially in March & April. The Mar & Apr lifts were basically double the average. The 25% tariff was effective 4/3/25. Consumers saved thousands of dollars, but the binge buy ended in May, -58.5% below avg. Sales did bounce back in June, +5.3%, 23% above avg.
Gas Stations – They are truly in turmoil. Their only plus month was -42% below avg and all drops were bigger than 2024.
Relevant Retail – They do about 60% of Total Retail $ so it’s no surprise that they have a similar pattern. 1 big difference is that they were +1% in Feb – no drop. The Feb/Mar & May/Jun lifts were below avg while the Jan & Apr lifts were above avg. Their 23>24 lift was above Total Retail. In May their lift was much better than Total. In June, the gap narrowed. Their progress has essentially stabilized.
Total Retail – They had a drop in February, but March was basically equal to the average and Jan & Apr were slightly above average. All non-Feb months had lifts above the 3.0% 23>24 Y/E increase but the May lift was only +3.2%, -33.7% below avg. The situation improved a little in June, +3.7%, but the lift is still -19% below avg.
TOTAL 6 MONTHS IN 2025: $↓: 8; ↑Avg: 12; ↓Avg: 10
Jan: $↓: 0; ↑Avg: 4; ↓Avg: 1; Feb: $↓: 4; ↑Avg: 0; ↓Avg: 1; Mar: $↓: 1; ↑Avg: 2; ↓Avg: 2
Apr: $↓: 1; ↑Avg: 4; ↓Avg: 0; May: $↓: 1; ↑Avg: 1; ↓Avg: 3; Jun: $↓: 1; ↑Avg: 1; ↓Avg: 3
Now let’s take a closer look at Relevant Retail. We will report on the 11 channels in our Advance report.
11 Relevant Retail Channels (98% of Ytd Rel Rtl $)
Relevant Retail – Their +3.6% lift in 24 was -22.8% below average. No drops in 25. The lifts for February, March, May & June were below average, but January & April were above average. The lift is now +3.9%, -17.5% below avg.
Furniture – No drops. Lifts were double the average in January, March & April but still big in May & June. The huge lifts in Mar>Jun were probably due to fear of skyrocketing prices from impending tariffs.
Electronics/Appliances – They have ongoing high deflation. $ Drops in both January & February. Sales turned positive in Mar, dropped in Apr>May, then returned to slightly positive, +0.7% in June. The 2 lifts were both below average.
Bldg Matl/Garden/Farm – They had the smallest of the 4 drops in 23>24, -0.6%, but the 3rd biggest decrease (of 6) in February, -6.1%. They had lifts in Jan, Mar, Apr & Jun but all were below average. The April increase was -77% below avg and May saw their 2nd 2025 drop. June was nearly a drop, only +0.2%, 96.1% below avg.
Grocery – Sales were only +2.0% in 24, -36% below average but they surged in January to +5.1%, 63% above average. Growth slowed to 1% or less in Feb>Mar, 70+% below avg. They had a strong rebound in April. Sales were +5.9%, 94% above average. The lifts slowed markedly in May>Jun. June is down to +1.5%, -52.3% below avg.
Health/Drug – Sales were +3.6% in 24, -31% below avg. The lift grew in Jan>Feb to 4+%, about -20% below avg. Sales surged in Mar>Apr to +8.8%, 75% above avg, slowed to +6.7% in May, then June hit a 25 high of +9.7%, 93% above avg.
Clothing – 24 $: +2.5%, -19% below avg. A strong start to 25, +5.4%, 67% above avg. Sales fell -2.4% in Feb, but the Mar lift was 1% above avg. Sales “took off” in Apr to +6.9%, more than double the avg lift. The strong lift continued in May, +5.4%, 62% above avg. The pre-tariff buying binge ended in June as the lift slowed to +2.4%, 24% below avg.
Sport/Hobby/Book – They were -2.8% in 24. This trend continued in Jan>Feb, hitting bottom at -6.4% in February. In Mar>Jun they turned slightly positive, peaking at +2.1% in May, -35% below avg. Jun slowed to +0.9%, -72% below avg.
Department Strs – It’s difficult to find something positive. They were -4.6% in 24 and had drops Jan>Jun in 25. The biggest drop was -5.9% in Feb, but Jun was #2, -4.5% – no surprise. Sort of good news: 4 of 6 drops were below avg.
Clubs/SupCtrs/Value/$ – They offer value and the convenience of 1 stop shopping. They have had strong growth since their creation. COVID accelerated growth so it is no surprise that all lifts are below avg. They even had small <-0.3% drops in Feb/Mar. Things improved in April, +5.3%, then slowed to +3.8% in May and +1.9% in Jun. Jan was best, +5.7%.
Miscellaneous – Pet Stores account for 15+% of this group’s sales. They had 2 below avg lifts, Feb & Apr. The Jan & Mar lifts were 80+% above avg and the May>Jun lifts were more than double the avg. They have the 2nd best performance of any channel, behind Furniture Stores, and they achieved it without the benefit of a pre-tarifflation buying surge.
Nonstore – 90% of $ are from internet/mail order (vast majority is internet). The Internet has had strong sales growth since its inception, but it skyrocketed due to COVID’s “stay at home” behavior. They have an average lift of about 10%.
Their 24 lift was +8.1%. All lifts in 25 were below this and below average – no surprise. Low: Feb +5.0%; High: Mar +7.2%
SUMMARY
23>24:$↓: 4; ↓Avg: 6; ↑Avg: 1 6 MONTHS IN 2025: $↓: 17; ↓Avg: 30; ↑Avg: 19
Jan: $↓: 3; ↓Avg: 4; ↑Avg: 4; Feb: $↓: 6; ↓Avg: 5; ↑Avg: 0; Mar: $↓: 2; ↓Avg: 5; ↑Avg: 4 Apr: $↓: 2; ↓Avg: 5; ↑Avg: 4; May:$↓: 3; ↓Avg: 4; ↑Avg: 4; Jun: $↓: 1; ↓Avg: 7; ↑Avg: 3
In the above Summary, regarding Drops and Above Average lifts, a green number indicates the best and a red is the worst. The best months are Mar & Apr and the worst is Feb. However, the biggest positive change occurred in March. 4 channels with drops turned positive. 3 became below average and 1 above average. 3 with below average lifts moved up to above average. The classification of 4 were unchanged so 7 fueled the improvement. April was the same as Mar. May was worse than April due to 3 drops. In Jun, Drops fell to 1 but above avg fell to 3. Note: 4 has become the norm in above avg lifts. We also can’t forget January. The number of positive lifts vs Y/E 24 moved up from 7 to 8 but the number with above average increases rose from 1 to 4 – a significant change. Even with 8 drops/below avg lifts, the situation has improved since hitting bottom with 11 in Feb. The CPI is low, but up for all in Jun. Pre-tariff binge buying may be over.
Now let’s take a different view of the data from the Big Groups and the same 11 channels. Rather than monthly sales, we we will look at Ytd numbers. We will still view them monthly so we can see any trends.
The Ytd numbers are arguably the most important. In December, they become Year-End, which is the most quoted and remembered data in any year. While the monthly data shows what’s happening in the marketplace right now, the Ytd data consolidates the data. This blending extends the impact of big sales spikes – positive or negative. This can be either good or bad. The impact of the big drop in February 25 was lessened by the widespread Above Average January lift. It can also work the other way. The big February drop reduced the positivity of stronger lifts in Mar>Jun. Overall, progress stalled in May & June. We’ll begin our analysis with the Big Retail Groups.
The first thing that you notice is that the spending patterns for Restaurants and Relevant & Total Retail are virtually identical. All groups had January lifts and all, but Gas Stations were Above Average. However, only Auto had Above Average lifts in Mar>Jun. Also, only Gas Stations had any sales drops. Overall, the improvement paused in May>Jun.
Restaurants – Sales for 24 were +5.2%, -7% below average. They flipped in January as the lift vs last year grew to +5.7%, 5.5% above average. The lift radically slowed in February to +2.4%, -57% below average. The situation steadily improved in March/April, even slightly in May but essentially stabilized in June at +5.1%, 9.3% below average.
Auto – Sales were +2.3% in 24, -47% below avg and the worst “positive” performance of any group. They turned it around in Jan with a +5.8% lift, 32% above avg. The lift dropped to +2.0% in Feb, -56% below avg and the smallest lift of any positive big group. Due to pre-tarifflation buying the lift took off in Mar/Apr, reaching +5.9% in April, 33% above avg. In May>Jun the surge ended, and the lift fell to ≈5%. They are the only Group with Mar>Jun above avg lifts.
Gas Stations – Whether you look at the data monthly or Ytd, they are doing bad. The June Ytd sales drop of -4.0% is even 38% worse than the -2.9% at Y/E 24. That does not bode well for 2025.
Relevant Retail – Except for January, +5.0%, they seem to be stuck in the 3% lift range. Thanks to an Above avg monthly lift, April Ytd, +3.9%, did finally exceed the +3.6% of 2024. The lift stayed at +3.9% in May>Jun, it also stayed at about -18% below the Ytd avg. Their slow, steady Mar>Apr progress paused in May>Jun.
Total Retail – The pattern matches Relevant Retail but the YOY changes for all but January & March are smaller. With similar averages, Total has bigger disparities. Total includes Auto & Gas Stations which have had extreme lifts & drops. Their steady Mar>Apr progress also paused in May>Jun, but their Ytd lift has been above 24 from March through June.
Summary and Comparison of Monthly to Ytd
Monthly: Drops: 8; Below Avg Lifts: 10; Above Avg Lifts: 12
Ytd: Drops: 5; Below Avg Lifts: 17; Above Avg Lifts: 8
Mon: Jan: $↓: 0; ↓Avg: 1; ↑Avg: 4; Feb: $↓: 4; ↓Avg: 1; ↑Avg: 0; Mar: $↓: 1;↓Avg: 2; ↑Avg: 2
Ytd: Jan: $↓: 0; ↓Avg: 1; ↑Avg: 4; Feb: $↓: 1; ↓Avg: 4; ↑Avg: 0; Mar: $↓: 1; ↓Avg: 3; ↑Avg: 1
Mon: Apr: $↓: 1; ↓Avg: 0;↑Avg: 4; May: $↓: 1; ↓Avg: 3; ↑Avg: 1; Jun: $↓: 1; ↓Avg: 3; ↑Avg: 1;
Ytd: Apr: $↓: 1; ↓Avg: 3;↑Avg: 1; May:$↓: 1; ↓Avg: 3; ↑Avg: 1; Jun: $↓: 1; ↓Avg: 3; ↑Avg: 1;
In the summary the orange numbers show that the Ytd report levels the Feb>Jun data. The situation doesn’t look good Ytd but it’s better than 24 for all but Gas Stations. Monthly, the Big Groups stabilized in May. In Ytd data, they stabilized in March.
Now, Let’s look at Ytd Sales for Key Relevant Retail Channels
The Ytd chart looks a little more consistent than the Monthly chart. This is true. Ytd extends the impact of big lifts or drops. The Ytd version has 27% less Below Avg lifts (middle ground), but 29% more Drops & 16% more Above Avg lifts. The result is balance. Ytd also has 3 channels that had drops every month in 2025. Monthly has only 1. However, Ytd has 2 channels with Above Average lifts every month. Monthly has none. It’s a complex situation. Let’s get into the specifics.
Furniture Stores – They are going strong. Their huge January lift pushed the February Ytd lift from below to above avg. Now, all months are above average. Tarifflation fear caused binge buying in Mar>Jun so the current lift is still huge.
Electronics/Appliance – Ytd they are all negative. This version hides the small Mar & June lifts. The positive impact in the Ytd chart was that their YOY drop slowed from -5.0% in February to -1.5% in June.
Bldg Matl/Garden/Farm – Their big February drop turned March from a below average monthly lift to a -0.4% Ytd drop. In a reversal, Mar/Apr lifts made Ytd April slightly positive, +0.1%. Sales fell -2.8% in May so Ytd May & Jun were negative.
Grocery – Their big January lift made their situation look significantly better in Ytd. However, the Ytd view essentially hid the huge above average lift in April. Note: The current Ytd lift (+2.8%) is 40% above 24 Y/E and just 11% below the annual average.
Health – Monthly & Ytd have a similar pattern – Jan>Feb, below average lifts; Mar>Jun, above avg. The May monthly lift was smaller than Mar/Apr but the June lift was huge, almost double the avg. Ytd is now 97% better than 2024.
Clothing – They had a +5.4% lift in January, 67% above avg. This eliminated the Feb drop in Ytd but the Feb drop changed Mar from above to below average in Ytd. Apr/May Monthly lifts were big. Jun was small but Apr>Jun was above avg Ytd.
Sport/Hobby/Book – They had drops in Jan>Feb. Feb was -6.4%. This turned Ytd all negative. It also hid the possible start of a recovery. Mar>May had increasing monthly lifts. June slowed but Ytd it is -0.4%, much better than -2.8% in 24.
Department Strs – Both reports show drops every month. They have been fading for years. It continues.
Club/SupCtr/Value/$ – They offer value and convenience, the biggest shopping drivers. Some $ stores are struggling but SuperCenters/Clubs are still going pretty strong. Besides the internet, one problem in sustaining strong growth is that they are running out of new customers. The Monthly report had a -0.2% drop in February and a -0.3% drop in March. The Ytd numbers look better. There are no drops, but the June Ytd lift is only +2.6%, 69% below avg and 10% below 24.
Miscellaneous – This is probably our favorite channel because it includes pet stores. They also have great performance. In the Monthly report, only the YOY lifts for Feb & Apr are below avg. All others are above avg. The Ytd report is even better. All months are above avg and June is +7.4%, 72% above average and 37% more than Y/E 24.
Nonstore – They are driven by the internet which has had the strongest growth and became the biggest $ channel in 2020. The Monthly & Ytd reports have similar patterns – all months below avg. June Ytd is +6.4%. That sounds great but it is -37% below average. We’re seeing that it is difficult, if not impossible to maintain double digit growth…forever.
Relevant Retail – Their $ come from a mixture of different spending patterns. They had no drops and both Monthly & Ytd show Mar>Apr growth and a May>Jun pause. Ytd hides the Above avg April lift but shows that the group’s performance in Apr>Jun now exceeds 24…+3.9% to +3.6%. Here is a summary and comparison of Monthly to Ytd for the 11 channels.
Monthly: Drops: 17; Below Avg Lifts: 30; Above Avg Lifts: 19
Ytd: Drops:22; Below Avg Lifts: 22; Above Avg Lifts: 22
Mon: Jan: $↓:3; ↓Avg: 4; ↑Avg: 4; Feb: $↓: 6; ↓Avg:5; ↑Avg: 0; Mar: $↓: 2; ↓Avg: 5; ↑Avg: 4
Ytd: Jan: $↓:3; ↓Avg: 4; ↑Avg: 4; Feb: $↓: 4; ↓Avg:5; ↑Avg: 2; Mar: $↓: 4; ↓Avg: 4; ↑Avg: 3
Mon: Apr: $↓: 2;↓Avg:5; ↑Avg: 4; May: $↓: 3; ↓Avg: 4; ↑Avg: 4; Jun: $↓: 1; ↓Avg: 7; ↑Avg: 3
Ytd: Apr: $↓: 3; ↓Avg:3; ↑Avg: 5; May: $↓: 4; ↓Avg: 3; ↑Avg: 4; Jun: $↓: 4; ↓Avg: 3; ↑Avg: 4
The key differences between the Monthly & Ytd reports are in the lingering Ytd impact of big drops and lifts. Both views are critically important. Monthly shows what is currently happening in the marketplace and Ytd puts it into perspective. They also show trends over time. Ytd provides an overview while Monthly shows the details fueling the movement.
Inflation negatively affects retail growth both in the short term, with spikes or drops, and in the long term, with cumulative high prices. It can even have an impact before it happens. We saw this with pre-tarifflation “fear” buying. The current retail situation is not good. The YOY lifts vs 24 are generally below the long term avg for most channels. Retail “hit bottom” in Feb but most channels (not Gas Stations or Dept stores) showed improvement in Mar/Apr. The situation got a little worse in May/Jun but Ytd it is stable & better than 24. Inflation is low, but prices are still high. We’ll see…
Finally, for your reference, here are the May and June inflation rates for the CPIs of the retail groups and channels in this report. This includes special aggregate CPIs created with the instruction and guidance of personnel from the US BLS. I also researched data from the last Economic Census to review the share of sales by product category for the various channels to help in selecting what expenditures to include in specific aggregates. Of course, none of these specially created aggregates are 100% accurate but they are much closer than the overall CPI or available aggregates. The data also includes the CPI changes vs 2021 to show cumulative inflation. The chart shows both monthly and Ytd inflation so it can be used as a reference for both measurements in the sales growth report.
Monthly YOY CPI changes of 0.2% or more are highlighted. (Green = lower; Pink = higher)
- In the Big Groups, Restaurant inflation was unchanged. All others got worse.
- Total Retail flipped from -0.1% deflation to +0.6% inflation
- The monthly inflation also worsened for 10 of 11 smaller channels
- The biggest change was Furnishings jumped from 0.5% to 3.4%.
- Department Stores, Miscellaneous and Nonstore all flipped from deflation to inflation
- For 4 channels, the worsening was just a slower deflation rate
- The 1 smaller channel with improved inflation was Health/Drug – from +0.3% to +0.2%
- Cumulative inflation vs 2021 is still high & stable for most channels, especially Ytd
