Retail Sales Rise in Summer, Dining Out Declines

The households budgets in the paycheck-to-paycheck economy are still pinched, and consumers used July to stock up in a few key discretionary categories while dialing back on dining out.

The Census Bureau’s datareleased Friday (Aug. 15), indicated that retail sales were 0.5% higher over June’s levels, which in turn had been revised upward to a 0.9% gain from a previous 0.6% advance.

It’s hard to quantify the impact of the promotions, but as PYMNTS reported last month, Amazon had pushed Prime Day to last four days versus the usual two-day timeframe. And according to PYMNTS Intelligence data, 52% of all adult American consumers purchased something during the event, a record number, spending an average $360, up 10% from last year’s two-day sale. Walmartin turn, held a six-day sales event last month.

The July data from the government offers up some proof of the lure of the online promotions, as sales at non-store retailers—a category that includes eCommerce channels but is not limited to them—were up 0.8% in July versus June. This category is up 8% from a year ago, and remains among the most resilient of the spending categories tracked by the official reports.

Evidence of Some Pressures

Thus far into the year, retail sales have been up for four of the past seven months, indicating the volatility of consumer spending. In terms of gains, the 0.5% rise is the most modest of the year.

Tariffs have shifted spending to categories that are long-lasting, durable goods that are traditionally imported. Furniture and home furnishing stores saw sales up 5.7% relative to the January-July period of 2024, while household furnishings and supplies prices are up 2.4%, according to the Bureau of Labor Statistics. In addition, motor vehicles and parts saw a 1.6% gain month on month in July and are up 5% year to date as measured against last year.

Consumers are keen on keeping up appearances. In the first seven months of 2025, top performers have been led by health and personal care stores, growing 7.1% compared to 2024.

The spending noted above seems to be coming at the expense of dining out, as households examine where they can throttle back at least some discretionary options.

The July data indicates that spending at food and drinking places—i.e., restaurants and casual dining chains—dipped 0.4% in July versus June.

Sentiment is Taking a Hit

The July bump may prove to be short lived. In separate data that also was released Friday, the preliminary report from the University of Michigan shows consumer sentiment falling 5% in August, representing the first decline in four months.

After a cumulative 29% drop between December and April, sentiment as measured by their index rebounded 18% between April and July.

The decline in sentiment has been driven mainly by a 10% dip in the current indexwhich measures current assessments about personal finances. As reported by the University of Michigan, this deterioration “largely stems from rising worries about inflation.”

On Tuesday (Aug. 12), the Bureau of Labor Statistics released July data for the Consumer Price Index, with overall steadiness but accelerating price increases in several key categories and as higher tariffs affect the cost of living.

Year-ahead inflation expectations rose again after three months, from 4.5% last month to 4.9% this month. Long-run inflation expectations also reversed a two-month declining streak and spiked from 3.4% in July to 3.9% in August.