Retail Sales Increased 0.2% in February, Below Expectations
Consumers spent at a slower than expected pace in February, though underlying readings indicated that sales still grew at a solid pace despite worries over an economic slowdown and rising inflation. Retail sales increased 0.2 percent on the month, better than the downwardly revised decline of 1.2 percent the prior month but below the Dow Jones estimate for a 0.6 percent increase, according to the advanced reading Monday from the Commerce Department. Excluding autos, the increase was 0.3 percent, in line with expectations. Lastly, sales overall increased 3.1 percent year-over-year, better than the 2.8 percent inflation rate as measured by the consumer price index.
Total Retail's Take: David Silverman, senior director, Fitch Ratings, offered Total Retail the following analysis of the February retail sales data: "As the market increasingly focuses on data points to assess consumer health and sentiment, February retail sales suggested mostly a continuation of recent trends. As has been the case, discretionary categories like consumer electronics, home improvement, and apparel were well below average as consumers pull back spending on discretionary goods. Conversely, February saw good growth in grocery and personal care as consumers focus on needs.
"While consumer health remains good, Fitch is watching the recent news around tariffs, inflation and equity market volatility and its impact on consumer sentiment, particularly in discretionary categories. Fitch expects sluggish spending on these segments to continue through 2025 as consumers remain choiceful and value-focused. Operating volatility will continue to require flexibility and agility for retailers to successfully manage through this environment."
