U.S. retail sales rose 0.5 percent in July to $726.3 billion, matching economists’ expectations, following a revised 0.9 percent gain in June, according to the Commerce Department’s Census Bureau. The increase was driven by strong vehicle demand and major promotions, though some of the gain may reflect tariff-related price hikes rather than higher sales volumes.
Despite the positive figures, analysts caution that a cooling labor market and rising goods prices could limit consumer spending growth in the third quarter.
U.S. retail sales were up 3.9 percent compared to July 2024.
Major promotions support growth
J.P. Morgan analysts said July auto sales were boosted by a rush to purchase electric vehicles before federal tax credits expire on September 30. Major retailers also helped lift spending, with Amazon and Walmart launching major promotions to attract inflation-weary shoppers ahead of the back-to-school season.
Amazon extended its sales event to 96 hours—double its usual window—offering steep discounts on items from apparel to electronics. Still, analysts warn that consumer spending faces growing downside risks, with middle- and higher-income households accounting for most of the current momentum.
Core U.S. retail sales—excluding automobiles, gasoline, building materials and food services—rose 0.5 percent in July, matching market expectations. June’s increase was revised up to 0.8 percent from the previously reported 0.5 percent, reinforcing the view that underlying consumer spending remains resilient despite economic headwinds.
Read: Japan’s GDP grows 1 percent in Q2 2025 as exports remain resilient against U.S. tariffs
Retail trade sales rise 0.7 percent
Total sales for the May-July 2025 period were up 3.9 percent from the same period a year ago. The May-July 2025 percent change was revised from up 0.6 percent to up 0.9 percent.
The report also revealed that retail trade sales were up 0.7 percent from June 2025 and up 3.7 percent from last year. Nonstore retailers were up 8.0 percent from last year, while food service and drinking places were up 5.6 percent from July 2024.
Separately, the Labor Department’s Bureau of Labor Statistics said on Friday that U.S. import prices rebounded in July, boosted by higher costs for consumer goods, the latest indication that inflation was poised to rise due to tariffs. Import prices increased 0.4 percent last month after a downwardly revised 0.1 percent dip in June. Import prices, which exclude tariffs, were expected to remain unchanged after a previously reported 0.1 percent gain in June.
In addition, producer price data on Thursday showed a surge in goods prices excluding the volatile food and energy components, bolstering economists’ expectations that consumer inflation would accelerate in the months ahead, despite what has so far been a moderate tariff pass-through.
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