Hi, I'm Erica Pandy. Welcome to Axios Recap, where we dig into one big story.

It's Thursday, November 18th, and we're focused on the surprising boom in retail sales.

Retail sales have actually been rising for the last three months, and they've blown past their pre-pandemic levels.

I found this really puzzling. Let me explain why. It's because the annual rate of inflation reached 6.2% in October,

which is the highest we've seen in three decades. And then add to that, this poll that my colleague Felix Salmon recently reported on was showed us that a majority of Americans actually feel

that the economy is weak right now. So I wanted to understand why are people buying more things

if prices are rising and they're feeling down on the economy. And can retailers even handle this

surge in spending as they head into a holiday season

struggling with supply chain and hiring issues? In a moment, I'll be joined by retail analyst

Neil Saunders to discuss how we can square these economic storylines. We're joined now by Neil

Saunders, managing director and retail analyst at Global Data Retail. Hey, Neil. Hey, Erica.

So, Neil, inflation is up to a point we haven't seen in decades, but at the same time, retail

sales have been rising for three consecutive months now, and they're actually 21% above pre-pandemic

levels. And then you've got supply chain issues across the board that are keeping items,

consumers are trying to get a hold of off of shelves. I just want to know how can these three

storylines exist in the same moment. Yeah, it's really strange because you'd expect from some of

the economic numbers coming out that retail sales would be looking pretty terrible, but the

absolute reverse is true. And I think when you dive into

the detail, there's a number of reasons why this is happening. I think the first one is that actually

inflation, we view it as a very negative thing, and it is in terms of people's disposable incomes.

But actually, when you think about it in terms of retail growth, it's pretty helpful because what it does is it basically pushes up prices.

It means people have to spend more and therefore the retail sales numbers come in better.

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