PURCHASE, N.Y.—While inflation is impacting retail sectors and households in a myriad of ways, continued consumer demand contributed to double-digit growth across nearly all retail sectors in May. This is according to Mastercard SpendingPulse, which measures in-store and online retail sales across all forms of payment, not adjusted for inflation. 

Looking ahead to the critical mid-July through Labor Day back-to-school period, U.S. retail sales are expected to grow 7.5 percent, excluding automotive, compared with 2021. Sales are anticipated to be up 18.3 percent compared with pre-pandemic 2019, with Department Stores expected to be a noteworthy winner as the sector continues its recent rebound.

“Back-to-school is the second-biggest season for retailers and is often looked at as an early indicator of retail momentum ahead of the traditional holiday season,” said Steve Sadove, senior advisor for Mastercard and former CEO and chairman of Saks Inc. “While Mastercard SpendingPulse anticipates growth across sectors, retailers will need to find innovative ways to entice shoppers as discretionary spending potentially stretches thin as a result of increasing prices.”

This back-to-school season will be defined by the resilience and flexibility of the consumer. 

The forecast projects that department stores will continue their rebound following a multi-year decline. Department stores have made their way into the spotlight after 15 consecutive months of sustained growth. Serving as a one-stop shop with a range of options for the whole family at a variety of price points, the back-to-school season is anticipated to drive the Department Store sector up 13 percent year-over-year. 

According to Mastercard SpendingPulse, total U.S. retail sales excluding automotive increased 10.5 percent year-over-year in May, and 21.4 percent compared with pre-pandemic May 2019. This is outpacing YOY monthly growth experienced thus far in 2022. In-store sales were a key driver, up 13.7 percent compared to pre-pandemic levels.

Mastercard SpendingPulse reports on national retail sales across all payment types in select markets around the world. The findings are based on aggregate sales activity in the Mastercard payments network, coupled with survey-based estimates for certain other payment forms, such as cash and check.