While shoppers cut back on buying cars, electronics and appliances in May, spending overall largely kept up with inflation, according to today’s report from the U.S. Commerce Department. Nonstore sales, which include online, increased 7.0% year over year. Meanwhile, a MasterCard report suggests online and in-store sales gained momentum in May.

May retail sales numbers weren’t good for car dealers or appliance and electronics stores, but merchants in most other categories held their own.

The top-line number for U.S. retail and foodservice sales was down 0.3% in May compared to April, according to the preliminary monthly estimate from the U.S. Department of Commerce. But most of the May retail sales decline came from just a few big-ticket categories.

“Electronics and appliance sales were down 4.5% year over year and car sales were down 3.7% year over year,” says Ted Rossman, senior industry analyst at Bankrate, a personal finance information provider. “Some people may be deciding that now isn’t the best time to make one of these large purchases, especially with inflation rampant and recession worries looming.”

If people were really worried about inflation, you would think that dining out would be a discretionary expense that would be easy to cut back on, so I see this as a positive data point for consumer confidence.
Ted Rossman

But Rossman also notes that bar and restaurant sales were up 17.5% over May 2021. That suggests consumer strength and pent-up demand.

“If people were really worried about inflation,” he says, “you would think that dining out would be a discretionary expense that would be easy to cut back on, so I see this as a positive data point for consumer confidence.”


The monthly report from the Commerce Department doesn’t report online sales but it includes non-store sales. Those sales mainly represent purchases from retail websites. They also include May retail sales that took place on the telephone, door to door and through vending machines. May’s non-store sales were down 1.0% from April but up 7.0% from May 2021.

In the past, online sales grew faster than non-store sales, but that flipped in the first quarter of this year when non-store sales grew 10.1% and ecommerce only 6.7%. That’s because web sales were soaring in January-March 2021 because of the pandemic and grew much more slowly in Q1 2022 as many shoppers returned to stores.

The Commerce Department reports online retail sales quarterly, and the second-quarter report is due out Aug. 19. U.S. e-retail sales increased 6.7% in the first three months of 2022 compared to the first quarter of 2021.

U.S. online retail sales nearly double during the pandemic

Meanwhile, a separate report from MasterCard SpendingPulse estimates that sales solely online increased 2.2% in May over the same month last year. Online sales in May 2022 were up 99.1%, nearly double, from May 2019, the year before the pandemic struck. According to MasterCard SpendingPulse, online sales had declined 1.8% in April 2022 compared to April 2021. That was a time when COVID-19 vaccines were just becoming available and many consumers were still shopping heavily online.


In-store sales made even bigger gains in May, increasing 13.4% year over year. That’s a sign that consumers felt more confident returning to physical stores now that many have been vaccinated.

MasterCard SpendingPulse also projects that back-to-school retail sales growth will be stronger in stores this year than online.


Overall, retail sales picked up steam in May, growing 10.5% over last year. That’s a faster growth rate than MasterCard observed earlier in the year. Last month’s MasterCard SpendingPulse report said April’s retail sales increased 7.2% year over year, in line with retail growth during the first quarter of 2022.

“The continued retail sales momentum in May aligns with the sustained growth rates we’ve seen so far this year,” said Michelle Mayer, U.S. chief economist at the MasterCard Economics Institute. “The consumer has been resilient, spending on goods and increasingly services as the economy continues to rebalance. That said, headwinds have become stronger — including gains in prices for necessities like gas and food, as well as higher interest rates.”

What the May retail sales numbers mean

Excluding auto and gasoline sales, retail sales increased 0.1% in May compared to April and 7.9% year over year.

Jack Kleinhenz, chief economist of the National Retail Federation, says he expected May retail sales to cool off in reaction to inflation. Inflation accelerated to an annual rate of 8.6% in May.


“There have been swings across sectors that reflect the impact of both higher prices and supply chain disturbances, and higher interest rates are expected to curb spending going forward,” Kleinhenz says. “As inflation continues, consumers are looking for ways to stretch their dollars by saving less, tapping into savings accumulated during the pandemic and increasing their use of credit.”

But Rossman of Bankrate notes that retail sales continue to rise in line with inflation. He calls it respectable in the context of consumer preferences shifting from goods to services as COVID continues to abate.

“One could easily envision a scenario in which consumer spending was to fall,” he says. “Especially on discretionary items, amid the hottest inflation readings in more than 40 years. We’re not seeing that sort of broad-based pullback, which is welcome news for retailers and the broader economy.”

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