Consumers are using extra cash from tax rebate checks to offset higher gas and food prices, retailers say.
Retail sales continued to weaken last month, as consumers used extra cash from their federal tax rebate checks for daily necessities.
Sales nationwide rose by just 0.1 percent in June, the slowest pace in four months, the Commerce Department reported this week. Excluding slumping auto sales, which dropped to a two-year low, core sales rose by 0.8 percent, the report said.
While clothing and accessory store sales remained flat, health and personal care store sales picked up.
According to the National Retail Federation, the economic downturn has more shoppers focusing on necessities, despite the injection of nearly $50 billion in tax rebates from the federal economic stimulus plan.
"Many consumers have been practical with their tax rebate checks, using them to offset higher prices of gas and food," Rosalind Wells, the trade group's chief economist, said in a statement.
Wells said retailers will have to find creative ways to boost discretionary spending over the back-to-school season.