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Inflation has been the story of the summer for any retailer selling discretionary goods, as higher prices on essentials have led to swift, stark shifts in shopping behavior. But retail sales in July — up nearly 10% since last year and a little better than flat since June, according to numbers from the Commerce Department — indicate that consumer spending has held up despite record inflation.

It helped that gas prices last month began edging down, leaving more cash in people’s wallets. Plus the numbers look better than they really are because the federal government doesn’t adjust them for inflation. But they do include the first real gain in volume — actual goods sold — in three months, according to research from Wells Fargo economists.

“Overall, demand is not falling off a cliff and our view that retail is landing softly remains,” GlobalData Managing Director Neil Saunders said in emailed comments.

Natalie Kotlyar, national leader of the retail and consumer products practice at consultancy BDO, said she is not surprised to see retail holding steady in recent months. But there are also signs that retailers will be dealing with a changed consumer for the foreseeable future, she and others say.

There is an interesting phenomenon going on right now with inflation rates increasing and customers continuing to spend on discretionary goods,” Kotlyar said in emailed comments. “Summer vacations are certainly a driver of this, as are the relatively strong performances of off-price retailers. Consumers are finding a way to get the products they want and need for a price they are comfortable paying. This tells me that while consumers are willing to spend, they’re savvy – they are looking for savings when and where they can.”

That includes waiting for markdowns and switching brands, according to researchers at rewards marketing platform Blackhawk Network, who found that 46% of consumers they surveyed are buying more things on sale, and 22% say they’re buying less from their favorite brands.

Shoppers were careful in July, foregoing purchases, especially bigger-ticket items, per GlobalData research. And they went online, where they could easily find the best deals and conserve gas by staying home. While e-commerce growth had been ebbing this year as shoppers returned to stores, in July online sales rose nearly 30% from a year ago.

The question for retailers as the holidays loom is whether consumers’ fragile strength can hold. Wells Fargo economists Tim Quinlan and Shannon Seery said in a research note Wednesday that their staying power should last into Labor Day, but that once kids return to school and bills come due, households will begin to tighten their belts.

“Even as inflation is showing signs of moderating, it will do so only slowly,” they said.

If so, consumer budgets will shrink again as winter approaches and energy bills rise, according to GlobalData’s Saunders. The traditional autumn lift in apparel sales may be elusive this year, in part because winter and fall clothing tends to be more expensive than summer garb, he said.

Consumer retrenchment has been happening at the same time that retailers’ own expenses are up, pressuring margins and profits, Saunders also warned. That has already led to dramatic inventory adjustments and even layoffs in the industry.

“Equally, with lower volumes coming through, the spoils are being spread more thinly which is why there is now quite a variance in sales performance between various retailers,” he said. “Unfortunately, we see both these trends continuing to be in play until at least the year end.”

The consumer predicament that has scrambled demand and disrupted loyalty will be testing retailers as they begin to merchandise their stores for their all-important back-to-school and holiday seasons.

“The volatile economy could put a halt to consumer spending ahead of these critical times for retailers,” BDO’s Kotlyar said. “Alternatively, retailers may find that sweet spot with their customers where they’re aligned with product availability and cost, and then the sales will come and the margins will follow.”

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