Grocery sales continue to lose steam

Dive Brief:

Spending at grocery stores ticked up 1.1% in June compared with the same month in 2022 — the lowest annual pace since March 2021 — according to estimated figures published Tuesday by the U.S. Census Bureau.
Grocery sales were down 0.7% in June compared with the month before, reversing a slight gain by that measure in May.
Overall retail sales rose at a 0.2% monthly rate in June and posted a 1.5% year-over-year gain against a backdrop of slowing inflation.

Dive Insight:

While grocery spending was up modestly in June, the government’s latest retail sales data underscores how significantly the landscape has shifted for the industry since the start of the year.

Last month’s year-over-year grocery sales gain of just over 1% was off from 3.1% in May and continues a steady decline for the economic measure that started last December, when grocery sales growth dropped to 7.3% on an annual basis from more than 8% the month before.

Grocery shoppers put on the brakes

Grocery sales have rapidly lost momentum in 2023 after growing faster than 8% on an annual basis during much of last year, government figures show.

With inflation as a powerful tailwind, grocery sales rose at a yearly clip of at least 7% every month in 2022 except for September, when the figure came in at 6.8%. Meanwhile, the monthly decline in grocery sales recorded in June represents just the second time that metric has been negative since April 2022. Grocery sales were flat month-to-month in March ahead of a decline the following month.

Grocery sales growth trended further downward in June even as analysts noted that overall retail sales growth shows consumer spending has been holding up despite the uncertainty that continues to characterize the nation's economic picture.

Morning Consult found that the proportion of people in the U.S. who are “very concerned” about inflation has moved down to 47% from 64% at this point last year, according to Claire Tassin, retail and e-commerce analyst for the decision intelligence company.

Neil Saunders, managing director of GlobalData Retail, said that while people are continuing to spend, the latest sales figures paint a muted picture of the economy’s health.

“Consumers are far from depressed, but neither are they in celebratory mood. An air of caution pervades society and people are still in the mode of being careful about what they buy and trying to stick to set budgets,” Saunders said in an email.