NEW YORK — Americans cut their spending unexpectedly in May compared with a month before, underscoring how surging inflation on daily necessities like gas is causing them to be more cautious about buying discretionary items.
U.S. retail sales fell 0.3% in last month, down from a revised 0.7% increase in April, according to a government report released today.
Sales at furniture and home furnishings stores fell 0.9% while sales at food stores rose 1.2%. Business at restaurants was up 0.7%.
Adjusting for inflation, which jumped 1% from April to May, retail sales fell even further.
The report offers discouraging news about the economy as consumers were still providing critical support to the economy even after a year of seeing prices spiral higher for gas, food, rent, and other necessities. But signs of recession risks are rising. Inflation is at a 40-year high. Stock prices are sinking. The economy actually shrank in the first three months of this year. And the Federal Reserve is making borrowing much costlier.
Among the biggest worries is surging inflation, which has become more widespread and more persistent than expected. Consumer prices rose 8.6% last month from a year earlier, the biggest annual 12-month jump since 1981. Helping to fuel the surge were much higher prices for everything from airline tickets to restaurant meals to new and used cars.