NEW YORK (AP) — Shoppers are pulling back on spending on discretionary items like clothing and home goods as gasoline and groceries eat up more of their paychecks.
Those pressures led many retailers on Thursday to report only modest revenue increases in May, the latest sign of the economy hitting a soft patch.
Retailers that cater to wealthy shoppers and warehouse clubs like Costco that also sell gas reported the biggest gains.
Most of the spring, consumers seemed to shrug off rising prices. Now, gasoline at more than $1 per gallon more than last year and higher grocery bills are “finally taking a bite and affecting sales,” said Ken Perkins, president of research firm Retail Metrics. “It definitely raises the caution flag going into the summer.”
Revenue rose 5.4 percent overall at stores open at least a year among 27 retailers, according to the International Council of Shopping Centers. Excluding gasoline, the figure rose 3.7 percent.
That was within the 3 percent to 4 percent range expected, said Mike Niemira, ICSC chief economist and director of research.