U.S. grocery retail sales climbed 14% year over year in June, the third straight month of double-digit gains, Mastercard SpendingPulse reported.
With the increase, grocery sales stood 24.8% higher than in June 2019, before the consumer stock-up blitz triggered by the onset of COVID-19 in early 2020, according to Purchase, N.Y.-based MasterCard. Through the calendar 2022 first half, the average monthly uptick for grocery sales versus a year earlier was 10.8%, with March and February the only months recording less than double-digit year-over-year growth (both at 6.8%), SpendingPulse data show.
Grocery’s 14% gain for June was the highest thus far this year, just ahead of the 13.8% year-over-year increase in May. Mastercard SpendingPulse, the payment card giant’s retail sales analytics arm, noted that grocery was one of two categories in June with high inflation that have seen a lift in sales, the other being the fuel/convenience retail segment, whose sales surged 42.1% year over year and 55.7% versus June 2019.
Overall, June retail sales rose 9.5% year over year excluding automotive and 6.1% excluding automotive and gas, reflecting gains of 1.1% in e-commerce sales and 11.7% in in-store sales.
After the fuel/convenience category’s 42.1% jump, retail sectors seeing sales increases in June included lodging (+33.7%), air travel (+18.2%), jewelry (+16.2%), grocery (+14%), apparel (+13.1%), restaurants (+11.6%), department stores (+8.6%), electronics and appliances (+4.6%), furniture and furnishings (+4.2%), luxury excluding jewelry (+4%) and hardware (+2.6%).
Rising prices — namely for necessities such as food and fuel — helped drive sales gains in June, Mastercard said, as SpendingPulse reflects nominal spending and isn’t adjusted for inflation.
“Sector by sector, we’re seeing a varied picture of how inflation is impacting essential vs discretionary consumer spending,” Steve Sadove, senior adviser for Mastercard and former CEO and chairman of Saks Inc., said in a statement. “One notable highlight is that travel sectors such as airlines and lodging continue to show signs of strong demand.”
Meanwhile, evidence continues to build that inflation is squeezing demand. Madison, Wis.-based Fetch Rewards, a popular consumer rewards app, said Monday that its June Fetch Price Index report shows consumer demand declining for the second consecutive month amid escalating prices.
Inflation remains high, but June ushered in the first signs that the cost of food and household goods may be flattening after 18 straight months of increasing prices, Fetch noted.
The Fetch Price Index analyzes a panel of 405,101 shoppers and tracks 226 million in-store and e-commerce purchases over the past 24 months to provide a view of how consumer prices are impacting shopper behavior. For June, key findings include a 3.5% drop in units per household versus last year, which followed a 6.7% year-over-year decrease in May.
According to the Fetch index, the average grocery spend per household remains elevated, although shoppers are bringing fewer goods into their homes — an indication that consumers are feeling inflation’s pinch.
Trips per household in June came in above the 2021 levels but are gradually slowing in year-over-year growth, Fetch reported. Despite the decline in overall demand, shoppers are buying more private brands, as units per household in private label increased significantly for the first time in June, up 12.4% over last year.
As consumers continue to grapple with rising prices, they are bringing less into their homes, and their regular purchase mix is in flux as they trade down to lower price points.
"Response to inflation is not a one-size-fits-all approach. Household demand differs within certain categories despite similar price increases, and brands must optimize pricing and portfolio strategy to win and identify categories that are at most risk of substitution or categories where consumers are willing to spend. After all, value is perceived differently across categories and even brands within a category," said Wes Schroll, Fetch Rewards Founder and CEO. "With down trading becoming inevitable, brands will have to leverage accurate and precise data-led insights to understand evolving category sensitivities and value perception from consumers, to grow and maintain market share."