Business

Retail Sales, Prices Rise on Growing Car Demand
By wchung | 08 Jun, 2026

A busy month for car dealerships lifted retail sales for the first time in three months while more expensive food and gas boosted consumer prices by the most in nearly a year.

Retail sales rose 0.4 percent last month, buoyed by auto and gasoline station purchases. Most retailers reported declines for the month. Excluding autos, sales climbed 0.2 percent, the Commerce Department said Friday.

Consumer prices rose 0.3 percent in July, the Labor Department said. That’s the largest increase since last August to the Consumer Price Index, the government’s most closely watched inflation measure. Energy prices jumped for the first time in five months.

Excluding volatile food and energy prices, the so-called “core” index increased 0.1 percent in July. The cost of housing, clothes, and used cars and trucks all rose. Over the past year, consumer prices rose 1.2 percent. That’s up slightly from last month’s 1.1 percent pace but still a mild increase.

Broad declines in retail sales have economists concerned that spending will slow further in the second half of this year. Households are saving more and spending less as they struggle with high unemployment and lackluster job growth.

Economists note that the government revised activity in the previous two months to show slightly smaller decreases. But overall, the declines for most retailers in July suggest the recovery is losing momentum.

“There is only one thing that’s for sure — economic momentum has slowed,” said Jennifer Lee, senior economist for BMO Capital Markets.

The July increase in retail sales followed declines of 0.3 percent in June and 1 percent in May. Sales had surged 2.1 percent in March but since that time consumer spending, which accounts for 70 percent of the economy, has weakened.

The major bright spot was a 1.6 percent rise in sales of motor vehicles and parts. It was the best showing since a 6.6 percent surge in March.

Summer promotions and easier credit lured shoppers back to car buying last month. Nissan, Toyota, Volkswagen, Subaru and Kia reported the biggest gains. The industry sold more than 1 million cars and light trucks. That’s 5.1 percent higher than in July 2009. Last year auto sales fell to the lowest level in three decades.

Sales at gasoline stations rose 2.3 percent in July, the biggest jump since last November. But much of that strength reflected higher prices.

Sales were down 1 percent at department stores and also dropped at specialty clothing stores, furniture stores, hardware stores and appliance stores.

Prices are rising at the slowest pace in 44 years, well below the Federal Reserve’s inflation target. Core prices moved up 0.9 percent in the past year for the fourth month in a row.

July’s modest increase in consumer prices may quiet deflation concerns raised in recent weeks by some Federal Reserve officials. Deflation is a widespread and prolonged drop in the price of goods, real estate and stocks. It also reduces wages and can make it harder to pay off debts.

The last serious case of deflation in the U.S. was during the Great Depression. Most economists don’t believe deflation will happen. But they are watching consumer prices closely for any signs of it.

CHRISTOPHER S. RUGABER, MARTIN CRUTSINGER, AP Economics Writers WASHINGTON