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Rising prices are shaping the American economy in early 2022.
Following the 40-year high in consumer prices reported on Tuesday, that continued to be the theme as the federal government released new monthly data in key areas over the latter part of the week.
The new data showed that total retail sales ticked up in March, while prices for imports and wholesalers also continued to rise.
Here’s a closer look:
Monthly retail sales were up .5% month-over-month in March, according to the US Census Bureau. The total sales were up 6.9% year-over-year.
The Bureau also posted a revision to its data for February, now stating the month saw an increase of .8% in retail sales over January, as opposed to the previous number of .3%. The revised number means February had growth of 18.2% over the same month in 2021.
As with the Consumer Price Index released earlier this week, rising gas and food prices drove the increase in this area. Gas station sales had a particularly notable spike, up 37% year-over-year. This came as the cost of fuel continues to rise amid record inflation and the Russian invasion of Ukraine. Data released by the government is not adjusted for inflation.
Putting the focus on consumer goods, the National Retail Federation completed a calculation of retail sales totals that excludes gasoline and food services. Its measure showed that these "core" retail sales were unchanged from February, and up 4% year-over-year.
Per the Census Bureau, the biggest month-over-month increases were in general merchandise stores (5.4%), electronics and appliances (3.3%), sporting goods and hobby (3.3%) and clothing stores (2.6%).
Nonstore retailers, which includes purchases made online, were down 6.4% from the prior month in March, according to the Census Bureau, but the total was up 1.1% year-over-year.
“March retail sales show that consumers have maintained their ability to spend in the face of record-level inflation, supply chain issues and geopolitical unrest,” National Retail Federation CEO Matthew Shay said in a statement. “Consumers are adapting and shopping smarter for themselves and their families.
US import price index data (Courtesy of US Bureau of Labor Statistics)
Prices for imports were up 2.6% in March, which was the largest monthly increase since April 2011, according to the US Bureau of Labor Statistics.
This followed a 1.6% increase in February and a 2% rise in January.
Consumer goods followed the overall trend pattern. Data showed the import prices in the category had an uptick of 3% year-over-year. This was the largest rise since a 3.4% year-over-year increase reported in December 2011.
Prices for exports were up 4.5% month-over-month in March. Put together with increases in the first two months of the year, the BLS is reporting the largest rises in export prices since January 1989.
Prices for exports of consumer goods, meanwhile, were not in line with the overall trend, as it did not rise as dramatically. There was an increase of .8% in this category, according to the BLS.
Producer Price Index one-month changes (Chart via BLS)
The Producer Price Index, which measures the prices paid by suppliers and wholesalers before goods reach retail, also posted new highs in March.
The month-over-month increase of 1.4% was higher than the previous two months, the BLS reported Wednesday.
On a year-over-year basis, the BLS said there was an increase in the PPI of 11.2%. This is the highest increase since the government started releasing the measure in 2010.
The PPI's metric of prices for goods that leaves aside food, energy and trade services rose 0.9% in March. This was largest month-over-month increase of this measure since a 1% increase in January 2021.
Taken together, the measures show that everyone is paying more right now, whether they’re consuming, supplying or transporting goods. It’s why we’re not only seeing the price of goods on digital shelves go up, but also rare moves like a 5% surcharge from Amazon for fulfillment services.
Businesses must control costs as they bring in goods, while staying in line with consumer expectations as they look to sell them. It’s a fine line. Everyone is walking it.
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Labor disputes on the West Coast could cause further disruption heading into peak season.
When the first half of 2023 is complete, imports are expected to dip 22% below last year.
That’s according to new data from the Global Port Tracker, which is compiled monthly by the National Retail Federation and Hackett Associates.
The decline has been building over the entire year, as imports dipped in the winter. With the spring, volume started to rebound. In April, the major ports handled 1.78 million Twenty-Foot Equivalent Units. That was an increase of 9.6% from March. Still it was a decline of 21.3% year over year – reflecting the record cargo hauled in over the spike in consumer demand of 2021 and the inventory glut 2022.
In 2023, consumer spending is remaining resilient with in a strong job market, despite the collision of inflation and interest rates. The economy remains different from pre-pandemic days, but shipping volumes are beginning to once again resemble the time before COVID-19.
“Economists and shipping lines increasingly wonder why the decline in container import demand is so much at odds with continuous growth in consumer demand,” said Hackett Associates Founder Ben Hackett, in a statement. “Import container shipments have returned the pre-pandemic levels seen in 2019 and appear likely to stay there for a while.”
Retailers and logistics professionals alike are looking to the second half of the year for a potential upswing. Peak shipping season occurs in the summer, which is in preparation for peak shopping season over the holidays.
Yet disruption could occur on the West Coast if labor issues can’t be settled. This week, ports from Los Angeles to Seattle reported closures and slowdowns as ongoing union disputes boil over, CNBC reported. NRF called on the Biden administration to intervene.
“Cargo volume is lower than last year but retailers are entering the busiest shipping season of the year bringing in holiday merchandise. The last thing retailers and other shippers need is ongoing disruption at the ports,” aid NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “If labor and management can’t reach agreement and operate smoothly and efficiently, retailers will have no choice but to continue to take their cargo to East Coast and Gulf Coast gateways. We continue to urge the administration to step in and help the parties reach an agreement and end the disruptions so operations can return to normal. We’ve had enough unavoidable supply chain issues the past two years. This is not the time for one that can be avoided.”