Americans significantly increased their retail spending last month, showing the strongest growth in a year and a half. The Commerce Department’s recent report revealed a 1% surge in retail sales from June to July, a positive turnaround from a slight decline in the previous month. Auto dealers, electronics and appliance stores, and grocery stores experienced notable gains in sales.

When adjusted for inflation, retail sales saw about a 0.8% increase. Excluding gas station sales, which are not a true reflection of consumer spending habits, retail sales still rose by 1%. Despite facing challenges such as higher prices and interest rates following the pandemic, consumers are benefiting from rising average wages, enabling many households to maintain their spending levels.

Although households have been grappling with inflation, real wages have seen a slight increase compared to a year ago. Moreover, affluent households have witnessed a boost in wealth due to surges in stock prices and home values over the last few years. The uptick in wealth often serves as an incentive for increased consumer spending.