August Retail Sales Beat Forecasts as Spending Concentrates at the Top

U.S. retail sales rose 0.6% month over month in August, outpacing the 0.2% consensus estimate, with sales up about 5% from a year earlier. The headline figure points to a consumer that is still spending, but the composition beneath it is uneven.

Higher-income households increased spending 2.2% year over year in August, compared with just 0.3% for lower-income consumers. Households in the top 10% of incomes now account for 49.2% of total spending, the highest share since 1989. That split has shown up in corporate results: Walmart posted its slowest quarterly U.S. comparable sales growth in six years at 2.6%, below the 3.8% analysts expected, with average ticket growth of 1.1% and store traffic growth slowing to 1.5%.

Retailers have responded on price. Walmart cut prices on more than 11,000 items during the quarter to hold budget-conscious shoppers. For staples-oriented names including Kroger, Coca-Cola and Tyson Foods, the question is whether volume holds as the spending base narrows.