U.S. retail sales climbed 6.6% in May compared to a year ago, reaching $275.21 billion in total monthly sales. E-commerce led the way, rising nearly 10%, according to data released by the U.S. Department of Commerce.
But the headline number tells only part of the story.
Inflation and a wave of late tax refunds helped push sales figures higher. In volume terms, however, the picture is more modest. Core retail volumes grew just 0.2% year over year, down sharply from 1.2% in April, according to GlobalData. “Some of this isn’t visible in the headline numbers, as they include inflation, but in volume terms it is very evident that people are becoming a bit more cautious in their spending,” said GlobalData Managing Director Neil Saunders.
Gas Prices Are Squeezing Budgets
Retail sales at gas stations soared more than 25%, with U.S. consumers spending $16.8 billion more to fill their tanks compared to the same period last year. Despite that pressure, overall spending held up. Navy Federal Credit Union Chief Economist Heather Long noted that consumers have absorbed the gas price shock of 2026 remarkably well, even as real incomes have turned negative.
The tradeoff is showing up in where people are spending. Home goods sales fell 3.3%, as consumers pulled back on home and yard purchases to free up cash for fuel. Meanwhile, electronics sales rose nearly 6% and sporting goods and hobby stores saw growth of nearly 11%, reflecting a continued consumer appetite for experiences and entertainment.
Apparel sales grew 3.6%, which helped lift department store sales by 1.7%.
What Comes Next
With tax refunds expected to wind down in the coming months, UBS analyst Michael Lasser has cautioned that consumer spending could become more episodic and event-driven. Higher energy costs have likely already pulled dollars away from discretionary categories. That said, any easing of fuel prices tied to geopolitical developments could offer meaningful relief to stretched household budgets.
The takeaway for retailers: strong headline numbers are not the same as strong consumer health. Volume growth is slowing, spending priorities are shifting, and the months ahead will require a sharper read on where demand is actually coming from.
