Christmas items line shelves at Renys in Bridgton on Sept. 10, 2020, as retailers nationwide try to extend the end-of-year holiday shopping season to counter the pandemic's dampening effect on the economy and consumer sentiment. Credit: Lori Valigra / BDN

Consumers in the Pine Tree state are still spending despite inflationary pressures, data released by the U.S. Census Bureau on Monday showed.

Total retail sales in the state rose 4.5 percent in July compared with the previous year. That’s higher than the 3.2 percent growth last year compared with 2020. Nationally, retail sales were up 6.8 percent.

The sales data comes the month after the U.S. reported the highest inflation rate of 9.1 percent in 40 years. Retail sales are being watched as signs of economic health, as inflation has steadily pushed up prices and Mainers are getting less for their money.

The rising sales weren’t a surprise to Curtis Picard, CEO and president of the Retail Association of Maine. People are still buying, but part of the rise in retail sales could be attributed to the hefty price increases that have come with escalating inflation over the past year.

“The simplistic way to look at it is that if you sold 1,000 widgets last year and you sell 1,000 this year but they are 8 percent more expensive, the sales tax receipts are going to look like they are up 8 percent,” he said.

Still, he has heard anecdotally that summer was a strong season for Maine retailers. The road ahead isn’t as clear as federal regulators move to counter inflation.

The Federal Reserve is expected to once again increase its funds rate to 3.75 percent to 4 percent on Wednesday to tamp down inflation. That rate, which pushes borrowing costs higher for everything from homes to cars, has been rising steadily since last June, when it stood at 1.5 percent.

Still, the July Census data showed many retail segments grew their sales in Maine. Those included retailers selling building and materials supplies, food and beverages, health and personal care supplies and sporting goods. Miscellaneous store retailers, which include florists, used merchandise and pet supply sellers, did particularly well, with sales rising 22.3 percent compared with last July.

However, electronics and appliance stores saw a double-digit decrease in sales, and clothing and accessories and car sales were down modestly at less than 1 percent. Car prices have risen over the past year amid shortages and borrowing rates have risen.

Separate data from the Maine Department of Revenue showed higher monthly taxable sales in certain service industries and a 7.4 percent rise in total personal consumption of all types of goods in July over the previous year. Restaurant taxable sales in July at $432 million were up 6 percent over the previous year. Lodging sales at $338 million were up 8.6 percent.

Picard said back-to-school sales this year will likely bump up certain retail sales in August and September, but it is unclear how the holiday season will fare. The same factors as last year continue to weigh on retailers, including workforce shortages, rising costs, rising wages, inflation and high energy costs.

“Mondays are the new Sundays with so many stores closed simply because they don’t have staff,” he said. “The retail forecast for the holidays is cloudy.”