US retail sales rose 1.2% to $773.9 billion in August, the Commerce Department reported this week, beating expectations and reversing a 0.5% decline in July.

Most retail segments posted gains. Gas stations delivered the biggest lift, climbing 3.1% month over month as gas prices stayed elevated. Nonstore retailers, a category made up largely of e-commerce, increased sales 2.6%.

Miscellaneous store retailers gained 1.9%. Electronics and appliance stores rose 1.6%. Restaurants and bars and sporting goods, hobby, and book stores each added 1.2%. Furniture and home stores and health and personal care stores each grew 0.9%. Clothing and accessories stores rose 0.7%. Food and beverage stores increased 0.4%, with grocery stores up 0.5%.

Building material and garden equipment stores were the only major category to decline, falling 0.2%. That aligns with comments from Home Depot CFO Richard McPhail last month that the retailer's customers are "hesitant" to spend. Department stores, part of the general merchandise segment, dropped 0.8% even as general merchandise stores overall gained 0.7%.

The sales rebound follows an August Consumer Price Index increase of 0.4%, the Bureau of Labor Statistics reported last week — also above expectations.

Heather Long, chief economist at Navy Federal Credit Union, told Retail Brew in an email that higher prices may be pushing consumers toward online retail as they hunt for deals. Gains at restaurants and book and hobby stores point to consumers seeking "little splurges," she said, a behavior Retail Brew previously reported is also driving interest in mini beauty products.

But Long expects the picture to change. "A consumer spending slowdown is likely later this year and into early 2027 as middle-income and lower-income households feel the pinch from higher gas and grocery prices," she said. "Real incomes are flat or declining for many and they will have to cut back on something. But for now, consumption remains robust."