Despite record inflation and supply chain slowdowns, October marked another month of retail sales growth in the U.S.
Overall sales for the month were $638.2 billion, marking a 1.7% jump from September, according to a monthly report from the U.S. Census Bureau. Sales were up 16.3% compared with October 2020. Between August 2021 and October 2021, sales increased 15.4% from the same period in 2020. Retail trade sales grew 1.9% from September 2021, and 14.8% from October 2020.
The growth last month follows a pattern of strong sales in September and August after consumer activity in July dipped 1.1% from June. The recent upward spending pattern also suggests that pandemic-era buying slowdowns are fading away in advance of what experts are predicting will be a record-breaking holiday season.
“Retail sales data for October reflects the enduring strength of consumers’ finances and willingness to spend as the holiday season gets underway,” National Retail Federation (NRF) president and CEO Matthew Shay said in a statement. “Today’s numbers show that consumers are getting a jump on their holiday shopping. We continue to urge consumers to shop early and shop safely, and we fully expect this holiday season to be one for the record books.”
According to NRF forecasts, holiday sales in November and December will grow between 8.5% and 10.5% year-over-year and hit between $843.4 billion and $859 billion. This increase would shatter the previous record of all time growth at 8.2% in 2020 to $777.3 billion. Adobe is also predicting a season of record demand on the e-commerce front, with online sales expected to hit $207 billion. This would mark the first time that the online retail holiday season crosses $200 billion.
Port congestion and shipping delays have pushed consumers to complete their holiday purchases earlier than usual this year, which could mean a slowdown in spending through November and December. However, experts are still confident that strong sales will close out the year.
“Overall, the prospects for retail look solid and, unless there is a surprise collapse in the next two months, this year will be one for the record books,” said Neil Saunders, managing director of GlobalData, in a statement.
As sales increase, prices are surging to the highest inflation rate in over 30 years. Consumer prices rose by 6.2% in October compared with a year ago, according to the Bureau of Labor Statistics’ monthly report. This number represents the highest inflation rate since the 12-month period ending in November 1990. Shoe prices increased 5.2% in October, compared with the year-ago period.
Inflation is not having a detrimental impact on holiday shopping just yet, though experts say these effects might settle in later in 2022 and beyond if prices don’t level out.
“Looking further ahead, if inflation is not tamed, we see it becoming more of a brake on underlying or real growth,” Saunders said. “Consumers are already adapting behaviors to cope, including trading down in grocery, and this could be extended to spending in other sectors as inflation starts to erode disposable incomes in a much more serious way.”