Retail Rebound Signals a Consumer Shift, But Inflation Still Casts a Shadow

MILWAUKEE, WI – July 06, 2026 – A new report paints a picture of steady, if complex, momentum for America’s small businesses. According to the Fiserv Small Business Index for June, consumer spending saw a modest expansion, driven by a notable rebound in the retail sector and a subtle but significant rebalancing in consumer priorities. The index, which tracks point-of-sale data from approximately two million U.S. small businesses, climbed to 145, with overall sales rising 2.4% year-over-year.

However, beneath this headline growth lies a familiar narrative of inflationary pressure. The increase in sales was once again powered by higher average tickets, which rose 3.7% compared to last year, while actual customer traffic, measured by transactions, continued a year-long decline, falling 1.3%. This dynamic reveals a resilient but cautious consumer, one who is still spending but getting less for their money. The data suggests that while the economic engine is running, it's being fueled more by price hikes than by a surge in activity.

“Small business spending in June was driven by a healthier balance between pricing gains and consumer activity,” said Prasanna Dhore, Chief Data Officer at Fiserv. “Persistent inflation continues to shape spending behavior across both essential and discretionary categories, but the retail bounce and shift to goods spending suggest resilience.”

The Inflationary Engine and Cautious Optimism

The driving force behind the growth in small business sales remains stubbornly clear: inflation. The 3.7% year-over-year jump in average ticket size directly mirrors the broader economic environment. Recent data from the Bureau of Labor Statistics shows the Consumer Price Index remains elevated, with a 4.2% annual increase logged in May. For small business owners, this is more than a statistic; it's a daily reality.

According to the National Federation of Independent Business (NFIB), inflation and rising costs were the single most important problem facing owners in May, with a net 36% reporting they had raised their own prices. This creates a challenging cycle where businesses pass on costs to consumers, which in turn props up sales figures even as transaction volumes fall. The slight month-over-month improvement in transactions (+0.5%) noted by Fiserv offers a glimmer of stabilization, but the annual trend underscores the strain on consumer wallets.

This environment has fostered a sense of cautious optimism on Main Street. While recent surveys show that half of small business owners expect their own revenues to grow, only 24% are optimistic about the U.S. economy as a whole. This gap highlights a confidence in their ability to adapt, even as they harbor deep concerns about the macroeconomic headwinds they face.

A Tale of Two Sectors: Retail's Return and Restaurants' Resolve

June’s data brought welcome news for the retail sector, which has been navigating choppy waters. Total retail sales for small businesses jumped 3.0% year-over-year, a marked improvement from May’s softer performance. Crucially, this growth was supported by both higher foot traffic and modest price gains, with transactions rising 2.7% annually. This suggests a more sustainable form of growth, where demand is not solely reliant on price inflation. Categories like Sporting Goods, Clothing, and Health and Personal Care all showed improvement, aligning with broader industry forecasts from the National Retail Federation, which projects 4.4% retail sales growth for 2026.

In contrast, the restaurant sector continues to walk a tightrope. Sales edged up a meager 0.2% year-over-year, an improvement from May’s decline but still a sign of struggle. The growth was almost entirely propped up by a 3.3% increase in average ticket prices, as foot traffic continued to fall, dropping 3.1% from the previous year. While full-service restaurants held relatively steady, the data points to a consumer who is still dining out but is highly sensitive to cost. Industry experts note a rising demand for value, comfort, and nostalgia on menus as patrons seek affordable and emotionally satisfying experiences.

Decoding the New Consumer: A Rebalancing Act

Perhaps the most significant signal from the June index is the evidence of a broader rebalancing of consumer spending. For the last 18 months, spending on essential services has consistently outpaced discretionary goods. That gap is now narrowing, suggesting a pivotal shift in household budgeting.

Spending on goods, a category largely driven by discretionary purchases, rose 3.0% year-over-year. Tellingly, this was powered by a 2.5% increase in transaction volume, while the average ticket price rose just 0.5%. This indicates that consumers are actively shopping for goods again but are hunting for value, comparing prices, and being selective with their purchases. Easing gasoline prices, which provided some relief at the pump in June, may have freed up just enough discretionary income to fuel this return to goods.

Conversely, spending on services, which leans more toward essentials, grew 2.1% but saw transactions decline by 2.7%. The growth was entirely dependent on a sharp 4.8% increase in average ticket prices. This suggests that while consumers can shop around for deals on a new shirt or sporting equipment, they have fewer low-priced options for essential services, forcing them to absorb higher costs. This “K-shaped” spending pattern, where different consumer segments experience the economy in vastly different ways, continues to define the landscape. As one financial analyst noted, affordability has become the dominant theme in consumer decision-making, with many households actively seeking deals and showing less brand loyalty than ever before.