The numbers: Sales at U.S. retailers fell 0.3% in May largely because of fewer auto purchases, but rising prices due to high inflation may have also discouraged shoppers.
Economists polled by The Wall Street Journal had forecast a scant 0.1% increase.
If autos and gasoline are set aside, retail sales rose 0.1% in May.
Retail sales are a big part of consumer spending and offer clues on the strength of the U.S. economy.
After adjusting for a 1% increase in inflation in May, real retail sales fell by more than 1% last month.
Big picture: After surging in 2021, retail sales are likely to continue to soften.
For one thing, Americans are shifting their spending toward services such as travel and entertainment. Earlier in the pandemic, when they went out less, they bought more consumer goods such as cell phones, computers and home furnishings.
The economy is also likely to slow in response to higher interest rates. The Federal Reserve plans to raise rates sharply over the next year to try to stamp out the worst bout of inflation in 40 years.
If households cut back too much, however, it could be a blow to the economy. Consumer spending accounts for about 70% of U.S. economic activity.
Market reaction: The Dow Jones Industrial Average DJIA, -0.50% and S&P 500 SPX, -0.38% were set to open higher in Wednesday trades.