Mastercard SpendingPulse: Consumers continued to spend in July; online sales jump

Home-focused spending cooled in July while e-commerce sales surged amid Prime Day and other promotional events.

E-commerce sales in July rose 11.7% year-over-year, a sharp increase after months of softer growth, according to MasterCard Spending Pulse, which measures in-store and online retail sales across all forms of payment. At the same time, in-store sales remain elevated, up 11.1% year-over-year and 13.9% over the pre-pandemic 2019.

Total U.S. retail spending, excluding automotive and gas, increased 9% year-over-year.  The report noted that spending increases in July outpaced monthly year-over-year growth experienced thus far in 2022, with demand and higher prices both contributing factors. (Mastercard SpendingPulse reflects nominal spending and is not adjusted for inflation.)

The report revealed that as consumers continued to spend in July, the impact of inflation varied across sectors. In the grocery sector, for example, sales rose 16.8% in July, due primarily to food price increases. On the other hand, apparel (up16.6%) and jewelry (up18.6%) sales saw strong demand-driven year-over-year growth, well outpacing sector-specific inflation.

Other highlights from the Master SpendingPulse July report are below.

• E-commerce sales climb amid major promotional events. E-commerce posted its first month of double-digit sales growth — 11.7% — in July since December. (Sales are up 98.5%, or nearly double, over July 2019.) Although online sales have ticked up since the beginning of June, July’s major promotional events, which included Amazon’s Prime Day, helped entice shoppers to splurge (and save) with online deals.

• High season for vacation, with road-trippers seeing some relief at the pump. Travel remains a priority, with lodging up 29.6% year-over-year and airline sales up 13.3%  

Fuel and convenience spending remains elevated, up 32.3% year-over-year. But the growth rate is down compared to June – reflecting price declines at the pump.

• Housing market cool down slows sales of home-related goods. After heating up during the pandemic, the U.S. housing market has cooled considerably since the beginning of 2022, influencing consumer spending on home-related goods.

Sales growth for the home improvement (up 2.9% in July) and furniture & furnishings sectors (up 5.0%) has slowed.

• Department stores sales were up 14% year-over-year in July.

“The latest retail trends place an emphasis on consumer choice and passion-driven spending – they’re hunting for deals, shopping across channels and ultimately still spending on experiences and goods that make them feel good,” said Steve Sadove, senior advisor for Mastercard and former CEO and chairman of Saks Incorporated. “As retailers grapple with excess inventory and supply chain constraints, it’s likely that the promotional activity seen in July will continue to be an important strategy for retailers.”