Retail sales drop 0.6% in July as tax refund boost fades

U.S. retail sales fell 0.6% in July, the steepest decline since May 2025, as the spending lift from tax refunds that boosted sales in April and May wore off, the Commerce Department reported Friday. June's figures were revised to show a 0.2% gain.

Excluding gas stations and auto dealers, retail sales fell 0.2%. Sales at motor vehicle and parts dealers dropped 1.8% after a 1.9% increase in June that had been driven by automaker promotions. Electronics and appliance sales fell 0.5%, and online sales fell 2.2% following a June boost from an extended Prime Day event.

Gas prices rose to $4.08 a gallon, up from $3.85 a month earlier and 92 cents higher than a year ago, according to AAA, amid a standoff in the Strait of Hormuz. Consumer prices rose 3.4% in July from a year earlier, down slightly from 3.5% in June, though inflation remains above pre-Iran war levels of 2.4%. Prices are still rising faster than average wages.

Economist Christopher S. Rupkey of fwdbonds said the data signals emerging risk if consumers pull back further, even as retailers including Walmart, Target and Tanger report strong early back-to-school shopping driven by sales and deal-seeking.

Read the full story at thewellnews.com.