Check out the latest data that could help erase some inflation worries.

U.S. consumer prices rose at a slower-than-expected pace in May, despite higher gasoline costs.  Also, consumer prices have fallen over the past 12 months by the most since 1950, according to new data from the Labor Department.

The Consumer Price Index edged up 0.1 percent in May after being flat in April, below market expectations for a 0.3 percent increase.  Compared to the same period last year, consumer prices fell 1.3 percent, the largest decline since April 1950.

Which prices fell?  Among the declines, apparel and food each fell 0.2 percent and tobacco (which was being advertised at this Hess station recently) fell 0.3 percent.  Shoppers are paying more for items such as gasoline and prescription drugs.

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(Reuters photo)

Check out hopeful signs that the recession may be abating.

While recent reports showed slumping sales at many big-box retailers, there are other signs that the economy may be bottoming.

U.S. retail sales rose in May and the number of workers who filed new applications for jobless benefits last week fell for the fourth straight week.

The Commerce Department today reported that U.S. retail sales rose 0.5 percent in May, thanks partly to gasoline sales that jumped 3.6 percent. Meanwhile, the Labor Department said initial jobless claims fell to their lowest levels since Jan. 24.

Discount retailer Target has increased its quarterly dividend, Clorox did the same while also affirming its 2010 profit outlook and financial targets for 2013, and Del Monte posted far stronger-than-expected quarterly earnings and provided a better-than-expected 2010 forecast.

Not all the news has been hopeful, however.

While last month’s U.S. foreclosure activity ebbed from April’s record high, homeowners were still struggling to keep up with house payments and May foreclosure filings were the third-highest on record.

Unemployment is at its highest level since July 1983. Some economists are talking about a “jobless recovery”, gas prices are rising and spiking mortgage rates are cooling demand for new home loans.

The weak economy has led to haggling in some unexpected places – namely  Tiffany – and forced other exclusive brands like Juicy Couture and Louis Vuitton to join the retail hoi polloi in trolling online for sales via Facebook and Twitter.

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(Photo: Reuters)

Check out the basically flat profits at Costco.
 
Well, at least they are not falling, like many other retailers. But one of the reasons is something that is kind of hard to emulate at, say a Neiman Marcus or J Crew — selling gasoline.
 
Many of Costco’s warehouse clubs sell gas and the way the company operates that business gives it an advantage when fuel prices fall.
 
Costco replenishes its supplies on a daily basis, unlike traditional gas stations that bring in new fuel weekly. That means that when fuel prices fall, it is selling gas purchased at a more current, cheaper price, which helps margins, while competitors are selling gas they paid more for.
 
Okay, it probably doesn’t fit the business model of Macy’s. But if it needs the help, maybe Diesel could start selling diesel.
 
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(Reuters photo)

Check out sales falling again in the latest week.
 
The International Council of Shopping Centers-Goldman Sachs chain store sales index showed a 1 percent drop in the week ended Saturday, the worst week since April 5. Year-over-year, the index increased four percent.
 
But the ICSC did point out some positive factors for retailers: traffic improved at discounters, department stores, wholesale clubs and even apparel retailers.
 
Perhaps consumers can afford to drive to those stores again.

According to the U.S. Energy Information Administration, the average retail price of a gallon of regular-grade gasoline in the United States fell for the eighth consecutive week to $2.22 on November 10. That’s a $1.61 per gallon drop since September 15, ICSC noted.
 
Even the rising unemployment figures could be interpreted in a positive light. 
 
A J.P. Morgan research report notes that in the past five recessions, unemployment increased by about 2.5 percentage points from the low to the high, while retail stocks bottomed about halfway through.
 
“Although we’re not ready to call a bottom, we’d note that unemployment has increased (1.7 percentage points) from its recent sustained trough in February 2008, more than the historical halfway mark of past recessions,” analyst Charles Grom wrote.
 
The unemployment rate was 6.5 percent in October and J.P. Morgan economists see it peaking at 8 percent in the second quarter of 2009, so by that estimate, the rise in unemployment is more than halfway done.
 
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(Graphic: Reuters)

Gift card spending may be a little less frivolous and a lot more practical this holiday season.

Based on its 2008 Holiday Gift Card survey, Archstone Consulting expects gift card sales will fall 5 percent to $25 billion this holiday. The firm also expects gift card spending will shift toward household necessities like groceries or gas, or small indulgences, like dining at restaurants. 

Gift cards have exploded in popularity in the recent few years, and retailers typically count on customers coming back into their stores quickly after the holiday season to use their gift cards — and spend more than the value of the gift card.

But as consumers began to feel pressured by high gasoline and food costs last year, that did not quite work out as hoped.

Last year, Wal-Mart’s sales at existing stores rose a less-than-expected 0.5 percent in January. The discounter partially blamed the sales shortfall on consumers’ resistance to using their holiday gift cards to splurge, saying customers were holding on to the cards longer and often using them to buy food rather than discretionary items. 

A year later, consumers are still pressured by high gasoline and grocery prices, as well as an ongoing slowdown in the housing market, a weakening jobs picture and a turbulent Wall Street.

Archstone expects prepaid bank cards, like those issued by Visa or American Express, to be the more desired gift cards this year.

“Consumers are gravitating toward cards that allow them the flexibility to purchase household needs at the gas station, supermarket, or pharmacy,” said Dave Sievers, a principal at Archstone.

It also expects the “restaurant/fast food” category to sell more cards than any other category this holiday because eating out is a “simple luxury” for families.  Archstone expects gift cards will provide some much needed holiday support for eat-in restaurant chains, such as McDonald’s and Outback Steak House.

(Photo: Reuters)

Check out the falling gasoline prices.
 
The average U.S. price for regular unleaded gasoline fell to $3.70 on Aug. 22, down about 15 cents from two weeks ago. The price was also down 41.6 cents from the record higher $4.112 in July.
 
Soaring gasoline prices have been one factor that has kept consumers from going out to restaurants or spending on discretionary items like new clothes.
 
So if gas prices continue to fall, it could ease pressure on consumers and help retailers.
 
Trilby Lundberg, editor of the Lundberg survey that monitors gas prices, said if crude oil prices don’t move back up, gasoline prices would probably fall further.
 
That would just leave tighter credit, falling home values and higher food prices as factors that are stopping consumers from spending.
 
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(Photo: Reuters)

Check Out the quarterly profit at Kroger Co.

The largest U.S. grocery chain posted a higher quarterly profit on Tuesday, thanks to its emphasis on lower prices and gasoline discounts – music to its shoppers’ ears and higher sales for itself.

“Kroger continues to help customers stretch their budgets in a number of ways, including lower prices and our expanded generic drug and gas discount programs,” chief executive David Dillon said in a statement.

The price cuts, he said, were helping Kroger’s customers save $1 billion annually, at a time when shoppers deem every last dollar precious, as they face skyrocketing prices for necessities such as gasoline.

Kroger also raised its outlook for the full year, based on the strength of the results from the reported quarter.

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(Photo: Reuters)

Check out the quarterly results at Walgreen, one of the largest U.S. drugstore operators.

The company posted a 2 percent increase in quarterly profit, amid a weak U.S. economy and slowing growth in sales of prescription drugs —  in the reported quarter, Zyrtec was switched to over-the-counter status.

And a slower-than-usual flu season — (good for you and me) – wasn’t so good for Walgreen. The company also pointed to the milder flu period for a slowdown in prescription drug sales volume in the quarter.

The company said it is on track to beat its goal of opening 550 new drugstores this year — and perhaps even come to the rescue of cash-strapped shoppers in the process.

“We’re adding neighborhood locations for today’s customer who is searching for value and struggling with high gas prices,” President Greg Wasson said in a statement on Monday.

As of May 31, the company operated 6,727 store locations in 49 states, but will be in all 50 states when it opens its first Alaska stores in 2009.

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(Photo: Reuters)

Check out quarterly results from retail companies, including Sears, Costco, Heinz and Big Lots.

Markdowns? No good for Sears. The company, controlled by Eddie Lampert, posted a surprise loss, hurt by discounts and floundering sales at its Kmart and namesake stores.  Immediate respite is not in sight, Sears said, as consumers juggle higher gasoline and food prices.

But discounts on the right products can mean good fortunes. Costco, for instance, reported a 32-percent jump in profit, thanks to consumers who sought deals on items like food and gasoline. Big Lots, which sells excess inventory, also posted higher profit, thanks to strong sales at stores open at least two years.

Ketchup-maker Heinz benefited from price increases and a weak U.S. dollar and is now hoping for higher annual earnings fueled by growth in emerging markets and health and wellness items.

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Check out sluggish sales and high gasoline prices.
 
According to the International Council of Shopping Centers, chain-store sales were flat in the week ending May 24, compared with a week earlier, and were up only 1.5 percent year-over-year.
 
“Consumers remain cautious in their discretionary spending as a result of the record high gasoline prices,” said Michael Niemira, ICSC chief economist.
 
Gas costs cutting into consumer discretionary spending isn’t a new thought. But ICSC takes a stab at quantifying the effect, estimating that current gas prices — well over $4 a gallon in some places — are cutting demand at chain stores by nearly 1 percentage point.
 
Niemira also said a consumer tax rebate tracking survey is showing a “low propensity” to spend the recent tax rebate checks. That stimulus package might not be so stimulating.
 
Some retailers have been able to manage through the weakness. American Eagle Outfitters, for example, used cost-cutting and inventory reductions to post better-than-expected first quarter profit on Wednesday.
 
Others have have had more difficulty. Chico’s posted a sharp drop in quarterly profit, the latest example of weakness in  the women’s apparel sector.
 
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 (Photo: Reuters)