Retail Sales Came in Strong in June. Higher Prices Aren’t Hurting Spending Yet.

Only two main categories—home furnishing stores and places selling electronics and appliances—saw monthly sales declines in June. (Spencer Platt/Getty Images)

Spending rose at a faster clip than expected in June as American consumers once again bucked concern that a slowing economy and tariff-related price increases would crimp spending.

Retail sales increased 0.6% in June from May, according to data released Thursday by the Census Bureau. Economists polled by FactSet expected a 0.2% increase following a 0.9% decline in May.

Core retail sales, which strip out sales of cars, car parts, and gasoline, rose 0.6%, also better than the consensus for 0.2%. On an annual basis, sales rose 3.9%.

Most of the 13 categories tracked by the Census Bureau notched gains in June. Retailers categorized as miscellaneous stores saw the biggest increase—sales were up 1.8% from May—followed by motor vehicle and parts dealers, up 1.2%. Sales rose 0.9% for both home-improvement stores and clothing and accessories stores.

Only two main categories—home furnishing stores and places selling electronics and appliances—saw monthly declines. Both were down 0.1%. Department store sales, a subcategory within general merchandise sales, were down 0.8% even though the broader category increased 0.5%.

“The death of the consumer has been greatly exaggerated—as a blowout Retail Sales number shows that consumers are still spending and are keeping the economy growing,” wrote Chris Zaccarelli, chief investment officer for Northlight Asset Management.

The report rounds out a slew of economic data, released over the course of the week, that investors have been awaiting to help them “sketch out a landscape for how trade policy is affecting the economy,” wrote Glenmede’s investment strategy team in a note Monday.

June’s reading of the consumer price index, released Tuesday, suggested that higher tariffs are starting to trickle down into consumer prices. Headline inflation rose to an annual rate of 2.7% in June from May’s 2.4% gain, with discretionary categories such as food, household furnishings, recreation, and apparel seeing notable price increases.

Even spending at restaurants and bars ticked up 0.6% despite signs that Americans are moderating their spending on dining out. Economists say meals in bars and restaurants tend to be the first thing people cut when they are trying to save aggressively.

Thursday’s retail sales data suggests that consumers aren’t yet balking at the higher prices. They reflect what big banks, economists, analysts, and retailers have said to describe the consumers’ state of mind: Americans are cautious, but resilient.

“We continue to struggle to see signs of weakness…the consumer basically seems to be fine,” said Jeremy Barnum, JPMorgan Chase’s chief financial officer, during the company’s earnings call Tuesday.

Wells Fargo CEO Charlie Scharf had a similar message. He noted that credit-card spending growth, despite having softened “very slightly” in the second quarter, is still up year over year and remains strong overall, while consumer delinquencies have continued to decline. Household spending remains buttressed by a solid labor market with low unemployment, Scharf added.

“The bottom line is layoffs remain low,” wrote Heather Long, chief economist at Navy Federal Credit Union. “More Americans are employed now than a year ago and they are still confident enough that the economy will keep chugging along to continue spending. There’s still a lot of trepidation about tariffs and likely price hikes, but consumers are willing to buy if they feel they can get a good deal.”

June’s retail sales report should support a “solid rebound” for gross domestic product growth in the second quarter, offsetting the weaker activity from April and May, wrote Ben Ayers, senior economist at Nationwide. But spending throughout the second half of the year could be trickier to predict as momentum slows, he said.

“The underlying pace of consumer and business activity has weakened but isn’t anywhere close to signaling a recession,” Ayers added. “Faster inflation over the second half of 2025 as tariffs pass into prices more readily as well as continued softening of hiring should weigh on spending from here despite the positive data for June.”

Indeed, analysts and economists point out that the increase in vehicle sales could reflect people rushing to buy ahead of any price increases, which means they won’t be splurging on those bigger items later in the year. People may be front-loading other purchases, including back-to-school supplies.

On their end, retailers are bracing for consumers to become not only more value conscious and discerning, but also more prone to changing their spending patterns in response to news about tariffs and geopolitical uncertainty, according to Jharonne Martis, director of consumer research at LSEG.

Americans may become less willing to spend if food prices keep increasing, analysts say. Grocery prices ticked up 0.3% in June from May, and the cost of dining out rose by 0.4%.

So while June’s report provides economists and investors a sense of relief, it may be too early to give the all-clear for the months to come.

Write to Sabrina Escobar at sabrina.escobar@barrons.com