High inflation is holding back sales in the US this year

According to a new study, sales in the United States this summer will be under pressure as American consumers tighten their belts and significantly reduce shopping spending.

The back-to-school shopping season, which begins on the July 4 weekend, will grow 5.5% this year, compared with a 13.1% increase in 2021, according to forecast research from consulting firm Customer Growth Partners.

“We can see the momentum has diminished in May and June, but if it declines further, we could see growth in back-to-school between 2% and 3%,” said CGP President Craig Johnson.

With inflation at its highest rate in 41 years, such low growth will raise red flags for the entire retail industry. Back-to-school sales have grown an average of 4.5% over the past 20 years, according to CGP.

Surging energy prices, declining federal stimulus, rising interest rates, supply chain disruptions and declining personal savings are taking a toll, especially on lower-income households.

“For consumers, 9% inflation is an unmitigated disaster, eroding real incomes as wages and salaries grow by just 5% and inflation taxes hit low-income and fixed-income households hardest,” Johnson said.

Consumers are expected to invest in their wardrobes this summer, with apparel spending expected to grow 5.9%, compared with 33% growth last year during the back-to-school season. But electronics spending is expected to fall 4%, as most consumers bought new devices at the height of the pandemic, when many people were working or attending classes remotely.

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