Retail Sales Fell 0.6% in July, the Biggest Drop in More Than a Year

WASHINGTON — U.S. retail sales fell 0.6% in July, the steepest monthly decline in more than a year and a reversal that few economists had anticipated, the Census Bureau reported Friday.

Advance estimates of retail and food services sales came to $763.6 billion for the month, down from $768.1 billion in June. Sales were still 5.0% higher than in July 2025, and the May-through-July period ran 6.3% above the same stretch a year earlier. Economists had expected a gain of roughly 0.1% to 0.2%, according to Yahoo Finance. Excluding autos and gasoline, sales fell 0.2%, Bloomberg reported.

Motor vehicle and parts dealers posted the sharpest decline among major categories, falling 1.8% after a 1.9% increase in June that was helped by manufacturer promotions. Nonstore retailers, which include online shopping, dropped 2.2%; June's figure had been lifted by Amazon's four-day Prime Day event, which began in late June, earlier than in previous years. Gasoline stations fell 0.9%, and electronics and appliance stores fell 0.5%.

Several categories moved higher. Clothing and accessories stores rose 1.9%, health and personal care stores gained 0.7%, and food services and drinking places edged up 0.5%. Building material and garden supply dealers rose 0.3%. Grocery stores were essentially flat, slipping 0.1%.

Year-over-year comparisons tell a different story. Gasoline stations posted the largest annual gain among major categories at 16.2%, followed by miscellaneous store retailers at 10.7% and sporting goods, hobby, musical instrument and book stores at 10.1%. Nonstore retailers were up 7.7% from July 2025.

The pullback follows a stretch of resilient spending and arrives alongside other signs of strain. Consumer prices rose 3.4% in July from a year earlier, down slightly from 3.5% in June, the Labor Department said Thursday; inflation had been 2.4% before the Iran war. The national average price of gasoline reached about $4.08 a gallon Friday, up from $3.85 a month ago and 92 cents higher than a year ago, according to AAA.

The Census Bureau cautioned that the advance July estimate carries a margin of sampling error of plus or minus 0.4 percentage points. The June figure was unrevised at up 0.2%, though the agency said there was insufficient statistical evidence to conclude that change differed from zero.

The next retail sales report is scheduled for release Sept. 16.