Retail Sales Unexpectedly Fall In July as Government Tax Refunds Fade

Shoppers unexpectedly reduced their spending in July as the financial benefit from government tax refunds diminished.

Retail sales declined 0.6% last month, marking the steepest decrease since May 2025 following a revised gain of 0.2%, according to Commerce Department figures released Friday.

Spending had received notable boosts in both April and May when Americans drew on their tax refunds.

When excluding gas station and auto dealer sales, retail sales fell 0.2% in July. Gas prices rose overnight to $4.08 per gallon on Friday, compared with $3.85 a month earlier, according to AAA.

Consumer spending contracted across several categories including consumer electronics and online retailers.

The figures capture only a portion of consumer spending and exclude services such as travel and hotel stays. Restaurant spending, the sole services category tracked, rose 0.5%.