The annual inflation rate is at 6% as of February, according to the Labor Department's tracking of the consumer price index, which measures a broad mix of goods and services. Some of those higher sales have come from higher prices. On a year-over-year basis, retail spending was up 17.6% in February, according to the Commerce Department. So far, retail sales in the first two months of the year have proven resilient, even as consumers contend with inflation and follow a stimulus-fueled boom in spending in the early years of the pandemic. 'You still have to feed the same number of mouths, but you have to make choices,' said Karen Short, a retail analyst for Credit Suisse. Major companies, including Best Buy, Macy's and Target, have shared cautious outlooks for the year, saying shoppers across incomes have become more careful about spending on items such as clothing or consumer electronics as they pay more for necessities such as housing and food.įood, in particular, has emerged as one of the hardest-hit inflation categories, up 10.2% year-over-year as of February, according to the U.S. It's likely to pressure a weakening part of retailers' business: sales of discretionary merchandise, which are crucial categories for retailers, as they tend to drive higher profits. Yet for many families, the drop will be even steeper since the government assistance scales up to adjust for household size and income.įor grocers like Kroger, big-box players like Walmart and discounters like Dollar General, the drop in SNAP dollars adds to an already long list of worries about the year ahead. For those households, it will amount to at least $95 less per month to spend on groceries.

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