Economic Forecasts

Retail: Inflation Takes a Bite Out of Strong Sales

Kiplinger’s latest forecast on retail sales and consumer spending

Kiplinger's Economic Outlooks are written by the staff of our weekly Kiplinger Letter and are unavailable elsewhere. Click here for a free issue of The Kiplinger Letter or for more information.

If you already subscribe to the print edition of the Letter, click here to add e-mail delivery and the digital edition at no extra cost.

Retail sales surged 1.9% in October as consumers heeded advice to shop early for the holidays because of anticipated shortages. Slowing COVID-19 infections also helped by making shoppers feel more comfortable going out to stores. But rising prices meant that volumes rose less than dollar sales. Gas stations sold fewer gallons despite a strong rise in sales measured in dollars. Likewise, furniture and home furnishing sales volumes declined despite a dollar increase, and rising prices hid a restaurant traffic decline.

Despite rising prices, sales volumes strengthened in most categories. E-commerce was the big winner in October, jumping 4%. Also seeing significant volume pickups were electronics and appliances, building materials and department stores.

Motor vehicle sales rose for the second month after a four-month drop. While this is encouraging, the semiconductor shortage that has hindered new car production is far from over.

Holiday sales should rise 14% from last year’s level. Again, some of the pickup will be the result of higher prices instead of larger volumes. Retail sales excluding gasoline should rise by 18% this year. All this spending is likely to help boost yearly GDP growth to around 6%.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
The Berkshire Hathaway Portfolio: All 41 Warren Buffett Stocks Ranked
stocks

The Berkshire Hathaway Portfolio: All 41 Warren Buffett Stocks Ranked

The Berkshire Hathaway portfolio is a diverse set of blue chips, and increasingly, lesser-known growth bets. Here's a look at every stock picked by Wa…
November 16, 2021
Resist the Impulse to Buy These 14 Holiday Gifts
shopping

Resist the Impulse to Buy These 14 Holiday Gifts

Don't let those holiday sale promotions persuade you into buying something now that will be much cheaper later.
November 18, 2021

Recommended

Energy Stocks Come Roaring Back
Economic Forecasts

Energy Stocks Come Roaring Back

A combination of tight supplies, rising demand and continued economic growth is fueling the energy sector.
November 24, 2021
There's No Vaccine Against Inflation
Economic Forecasts

There's No Vaccine Against Inflation

Prices should ease in 2022, but inflation will remain above the levels of recent years.
November 23, 2021
Kiplinger's Economic Outlooks
Economic Forecasts

Kiplinger's Economic Outlooks

Regularly updated insights on the economy’s next moves.
November 23, 2021
The Biden Tax Plan: How the Build Back Better Act Could Affect Your Tax Bill
Politics

The Biden Tax Plan: How the Build Back Better Act Could Affect Your Tax Bill

Depending on your income, the Build Back Better Act recently passed by the House could boost or cut your future tax bills.
November 22, 2021