Relief at the Pump

The Census Bureau reported data on July’s retail sales Wednesday, a key metric used to gauge inflationary pressures. Tracking consumer spending is important because it comprises an estimated two-thirds of US gross domestic product, a measure of economic growth.

The previous month’s numbers were mixed. Retail sales, including food, but excluding autos and gasoline, rose by a seasonally adjusted 0.7%. Online shopping was particularly robust. Conversely, food sales were up just 0.2%, potentially reflecting cutbacks as consumers adjusted to the sector’s significant inflation. Auto sales, which are typically volatile, fell. Market observers believe this may be due to a chip shortage constraining supply. Meanwhile, consumers saved at the pump in July as gas prices dropped.

Target Rips off the Bandaid

Retailing giant Target’s (TGT) earnings reflect ongoing challenges as a result of pandemic-triggered supply chain snarls. The company reported profits plummeted close to 90% from a year ago. Delayed shipments caused a mismatch between available merchandise and the busy sales season, causing inventories to pile up. To clear out the surplus product company executives slashed prices, negatively impacting its bottom line.

Target asserts the move was necessary for the company’s long-term health, adding it remains on track to meet its full-year guidance.

Walmart Welcomes the Wealthy

Meanwhile, Walmart’s (WMT) CEO Doug McMillon observed an increase in traffic at Walmart stores, which he partially attributes to a new category of consumers on the hunt for discounts — the affluent. The retailing giant surprised analysts with earnings that blew through Wall Street projections as more shoppers from households with income at or above $100,000 are frequenting its stores.

With groceries costing nearly 11% more than a year ago, it seems people of all income levels are looking for relief from the high cost of food. When even your morning cup of joe costs 20% more, spending habits are bound to change

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