US Retail Sales Drop 0.6% in July, Largest Monthly Decline in Over a Year

US retail sales declined by 0.6% month-on-month in July, defying market expectations of a 0.1% increase, marking the largest monthly drop in over a year. Auto sales led the decline with a 1.8% fall, followed by online retailers at 2.2% and gas stations at 0.9%.

The drop coincided with the University of Michigan consumer sentiment index falling to 51.0 points from 55.2 points, in a clear signal that the American consumer is beginning to falter under the pressure of war-driven high fuel costs and elevated interest rates. Analysts consider this reading to be the first confirmation from actual data that slowing demand, rather than declining inflation alone, is currently doing the Federal Reserve's work.