US retail sales plunged again!

 US retail sales (month-on-month): 0.5%

US retail sales (year-on-year): 6.9%

Although the US retail sales had plunged from the previous month (Feb), it was still growing on a monthly basis.  However, this monthly growth was just a feint because of the nominal calculation.

Let me illustrate this with a simple calculation.

Retail sales = Price x Volume

Retail sales = $1 x 1000 = $1000

Let's assume the price increases 20% because of inflation and the sales volume drops 10%.

Retail sales = $1.20 x 900 = $1080

We can see from the aforesaid example that the retail sales figure increases to $1080 (8% increment) despite the sales volume dropping 10%.  In conclusion, if the price increase is much higher than the decline in sales volume, the retail sales figure will still grow.  We believe this is what is happening in the US now because the PMI is showing a significant decline in new orders.

http://sg-stock.blogspot.com/2022/04/us-ism-mpi-decreased-to-571-in-march.html