By ANNE D’INNOCENZIO AP Retail Writer
NEW YORK (AP) — Shoppers increased their spending at a better-than-expected pace in August from July, helped by back-to-school shopping, even as President Donald Trump’s tariffs are starting to hurt the job market and lead to price increases.
Retail sales rose 0.6% last month from July, when sales were up a revised 0.6%, according to the Commerce Department’s report. In June, retail sales rose 0.9%.
The August performance, announced Tuesday, was also likely helped by the continued efforts by Americans to keep pushing up purchases ahead of expected price increases.
The retail sales increases followed two straight months of spending declines in April and May.
Excluding auto sales, which have been volatile since Trump imposed tariffs on many foreign-made cars, retail sales rose 0.7% in August. Sales at auto vehicle and parts dealers rose 0.5%.
The data showed solid spending across various other outlets. Business at electronics and appliance stores was up 0.3%, while online retailers had a 2% increase. Business at clothing and accessories retailers rose 1%.
And business at restaurants, the lone services component within the Census Bureau report and a barometer of discretionary spending, rose 0.7%.
“This is further evidence that we shouldn’t underestimate the strength of the consumer,” Bankrate senior industry analyst Ted Rossman wrote in a note Tuesday. “Back-to-school shopping was a key theme in August, as evidenced by the strong clothing and electronics sales.”
Government retail data isn’t adjusted for inflation, which rose 0.4% from July to August, according to the latest government report. That was faster than the 0.2% pace the previous month. So that could have inflated the sales figures as well.
Inflation rose last month as the price of gas, groceries and airfares jumped while new data showed applications for unemployment aid soared, putting the Federal Reserve in an increasingly tough spot as it prepares to cut rates at its meeting this week despite persistent price increases.
Consumer prices increased 2.9% in August from a year earlier, the Labor Department said last week, up from 2.7% the previous month and the biggest jump since January. Excluding the volatile food and energy categories, core prices rose 3.1%, the same as in July. Both figures are above the Federal Reserve’s 2% target.
Core prices rose 0.3% for the second straight month.
Earlier this month, the Labor Department reported that U.S. employers — companies, government agencies and nonprofits — added just 22,000 jobs last month, down from 79,000 in July and well below the 80,000 that economists had expected. The unemployment rate ticked up to 4.3%, the highest since 2021.
Major retailers including Walmart, Macy’s and Best Buy recently reported their quarterly results, underscoring that shoppers are still buying, but are choosy. Some have raised prices but many, including Home Depot and Macy’s, have described the hikes as modest.
Still, so far, shoppers haven’t felt the big sting as some economists predicted earlier in the year as many retailers had ordered goods ahead of tariffs and absorbed a big chunk of the costs as they came in, worried about passing on any hefty price increases to consumers.
The price gains have also been gradual enough to mute changes in consumer spending behavior, Walmart CEO Doug McMillion told analysts last month after the nation’s largest retailer reported its fiscal second-quarter earnings results.
But Walmart and others said they expect to see costs increase as they replenish inventory at post-tariff levels.
Jewelry maker Pandora hasn’t announced specific price increases, but Pandora CEO Alexander Lacik said in a call with analysts last month that the company is monitoring the scenario.
He noted that “the U.S. consumer will eventually have to bear the brunt of these tariffs,” but added, “it’s not just on jewelry, it’s on many product categories. So the big question mark is, what happens with inflation in the U.S., unemployment rates, all sorts of other macro drivers, and I think this is ahead of us.”