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Illustration: Shoshana Gordon/Axios

Inflation is driving prices up, but that's not keeping people out of stores.

What's happening: Retail sales climbed for the third straight month in October — and industry experts say holiday shopping could come roaring back this year after a pandemic-induced slump last year.

  • "It's really strange because you'd expect from some of the economic numbers coming out that retail sales would be looking really terrible, but the absolute reverse is true," Neil Saunders, retail analyst and managing director of GlobalData Retail, told me on the Axios Re:Cap podcast.
  • The return of a proper holiday season after months and months of isolation and stress has many Americans in treat-yourself mode, he says. "One of the things that we're seeing, especially in the run-up to the holidays, is the kind of attitude that, 'I deserve to have a good time because things have been pretty miserable for the past couple of years.'"

By the numbers: The annual rate of inflation reached 6.2% in October — the highest we've seen in more than three decades.

  • But retail sales jumped 1.7% in October, rising for the third month in a row. And sales are 21% above pre-pandemic levels, per the New York Times.
  • Krizzia Soto-Villanueva of Burlington, Vermont, told the Times she's having a "retail therapy" moment: "I'm aware prices are going up, but I spent almost two years without spending money on myself. I'm not going to spend all of my savings, but if I really want something, I'm not going to hesitate much."
  • Indeed, some of the retailers doing especially well right now are luxury brands like Louis Vuitton.

Between the lines: There are a few other reasons why retail is going up-and-to-the-right alongside inflation, Saunders notes.

  • Not all of the rise is from people buying more stuff: Higher prices themselves bloat the sales numbers, he notes.
  • On top of that, the world has still not returned to normal, and people aren't eating out or going to the movies the way they used to. Some of the cash they'd spend on services has been temporarily allocated to goods, says Saunders.

What to watch: Even though shopping is booming, don't expect Black Friday and Cyber Monday to reach pre-pandemic sales levels. This year's holiday shopping has already begun, as concerns about supply chain issues have pushed people to buy gifts earlier.

  • But "earlier buying does not necessarily mean lower spending," says Inna Kuznetsova, CEO of 1010data, a market research firm. "Consumers are hungry for the positive emotions of in-person celebration. So we may see increased spending as well as earlier spending."

Go deeper

Black Friday in-store shopping up from 2020 but trails pre-pandemic levels

Shoppers carry their purchases during Black Friday shopping at Fashion Outlets of Chicago in Rosemont, Ill., on Nov. 26. Photo: Joel Lerner/Xinhua via Getty Images

More shoppers flocked to stores on Black Friday this year compared to last, but online shopping was lower than expected, according to data from Friday.

Driving the news: Online shopping was on the lower end of what was expected, largely because people had been ringing up their shopping carts earlier in the year in an effort to skirt potential supply chain issues, according to the Adobe Digital Economy Index.

Brazen shoplifting schemes sweep the U.S.

San Francisco's Union Square. Photo: Miikka Skaffari/Getty Images

As the holiday season gets underway, groups of thieves have undertaken brazen shoplifting exploits at stores across the U.S.

Why it matters: Organized retail crime costs retailers on average $700,000 per $1 billion in sales annually, per estimates from the National Retail Federation, and companies are blaming store closures and profit dips on the shoplifting scourge.

In photos: Americans hit stores for Black Friday

Shoppers walk through Macy's department store in New York City on Black Friday. Photo: Yuki Iwamura/AFP via Getty Images

Shoppers across the nation flocked to malls and major retailers Friday in search of "Black Friday" deals. About 158 million people were expected to shop in stores or online between Thursday and the end of the day Monday, according to the National Retail Federation.

Why it matters: Retailers hope a desire to return to holiday traditions will translate to big spending during the annual post-Thanksgiving sales events, even in the face of supply chain issues and rising prices due to inflation, as Axios' Hope King reported.

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