July retail sales dip as tax refund boost fades and auto spending slows

Data from the Commerce Department showed U.S. retail sales contracted by 0.6% in July, marking the steepest fall since May 2025 and ending a modest 0.2% rise in June. The downturn reflected weaker activity at motor vehicle and parts dealers, which dropped 1.8% after a June surge fueled by automaker incentives. Gasoline prices climbed to $4.08 per gallon, contributing to a modest 0.2% decline in sales excluding gas stations and auto dealers.

Online commerce fell 2.2% after Amazon's late-June Prime Day boost, and electronics and appliance sales slipped 0.5%. While restaurant spending rose 0.5%, overall consumer price growth eased to 3.4% year-over-year, down from 3.5% in June. Economists highlighted the need to watch back-to-school spending as shoppers seek discounts amid persistent inflation pressures.