Americans cut back on their spending last month as a surge in COVID-19 cases kept people away from stores.

Retail sales fell a seasonal adjusted 1.1 percent in July from the month before, the US Commerce Department said Tuesday. It was a much larger drop than the 0.3 percent decline Wall Street analysts had expected.

The report offers the first solid glimpse of how the spread of the delta variant of COVID-19 may have changed the spending habits of Americans. At the end of July, the US Centers for Disease Control and Prevention began recommending that even vaccinated people start wearing masks indoors in public places due to the delta variant which is causing a spike in COVID-19 cases.

According to Tuesday's report, spending fell at stores that sell clothing, furniture and sporting goods. At restaurants and bars, spending still rose nearly 2 percent, but the rate of growth has slowed from recent months before the delta variant spread and people were feeling safer about dining without their masks with others.

Major retailers are releasing quarterly financial results this week, offering other insights into behaviour during yet another uptick in infections. On Tuesday, Walmart raised its sales outlook for the year, a sign it expects Americans to keep on shopping at the same pace.

But the Commerce Department reported Tuesday that even online sales have started to stall, falling 3.1 percent from the month before. Companies have reported a slowdown after astronomical growth last year as people stayed home and shopped more online during the pandemic.

eBay, for example, said its number of active shoppers slipped 2 percent to 159 million in its latest quarter. UPS said it is shipping fewer packages in the US and Amazon, the world's largest online retailer, said online sales grew 13 percent in its most recent quarter, the company’s smallest quarterly online sales growth in two years.

First Published:Aug 18, 2021 11:45 AM IST