Finance

U.S. retail sales experienced a surprising 0.6% contraction in July, marking the most significant decline in over a year. The pullback was driven by reduced spending at auto dealerships, gas stations, and online marketplaces, indicating that persistent inflationary pressures may finally be wearing down American shoppers. Nonetheless, overall retail performance remained 5% higher when compared to the same period last year.

The annual consumer inflation rate in the United States slowed to 3.4% in July, matching expectations and down slightly from 3.5% in June. This cooling trend was largely supported by a retreat in energy and fuel costs as supply shock pressures stemming from geopolitical conflicts began to soften. Core consumer prices, which exclude volatile food and energy sectors, also moderated to an annual rate of 2.5%.

A preliminary August reading from the University of Michigan revealed that consumer sentiment retreated to 51, down from 55.2 in July and missed consensus forecasts. The drop in confidence was widespread across multiple demographic groups, with lower-income and older consumers feeling particularly vulnerable to eroded purchasing power. Additionally, year-ahead inflation expectations crept higher to 4.3%.