American consumers kept spending in August.
For businesses, that’s good news.
But another federal report released at nearly the same time shows why stronger sales don’t necessarily translate into stronger profits.
The U.S. Census Bureau reported that retail and food-services sales reached an estimated $773.9 billion in August, an increase of 1.2% from July and 6.0% from August 2025.
Meanwhile, the Bureau of Labor Statistics reported that U.S. import prices increased 0.7% in August and were 7.0% higher than a year earlier.
Put the two reports together and the business picture becomes more complicated.
Customers are spending more. But many businesses may also be paying more for what they sell.
That makes margins increasingly important.
Consumers Are Still Spending
The August retail-sales numbers provide another indication that American consumers remain active despite inflation and higher borrowing costs.
Total retail and food-services sales increased 1.2% from July.
Sales for the three-month period from June through August were 5.8% higher than during the same period a year earlier.
Retail trade sales alone increased 1.0% from July and 5.5% from August 2025.
Some categories were particularly strong.
Sales at gasoline stations were up 13.4% from a year earlier, although higher fuel prices contributed to that increase.
Food services and drinking places recorded sales 7.3% higher than August 2025.
Nonstore retailers, which include much of e-commerce, were up 7.1% from a year earlier.
For businesses, continued consumer spending is generally encouraging.
People haven’t stopped buying.
But revenue tells only half of the story.
Import Costs Are Moving Higher
The BLS import-price report provides the other half.
U.S. import prices increased 0.7% in August, following a 0.3% increase in July.
Over the previous 12 months, import prices increased 7.0%, the largest year-over-year increase since December 2022.
Energy played a role, but the increase wasn’t limited to fuel.
Prices for nonfuel imports increased 0.6% in August and 5.5% over the previous year.
Imported capital-goods prices increased 0.9% in August, while prices for imported consumer goods excluding automobiles increased 0.5%.
Prices for imports from China increased 1.0% in August, which BLS said was the largest monthly increase since the index began in 2004.
For businesses dependent on imported products, components, machinery or supplies, those increases can eventually show up in the cost of doing business.
Sales Growth Can Hide a Margin Problem
This is where the two reports intersect.
Imagine a business whose revenue increases 6%.
That sounds good.
But if the cost of merchandise, transportation, labor, insurance, financing and other expenses increases by the same amount—or more—the company can produce record sales while generating less profit.
That’s why owners should be careful about using revenue growth as the primary measure of business performance in an inflationary environment.
A company can be busier without becoming more profitable.
It can sell more units and make less money on each one.
It can even increase prices, report higher revenue and still lose purchasing power after its own expenses are considered.
The question isn’t simply:
Are sales increasing?
It is:
Are sales increasing faster than the costs required to produce them?
Import-Dependent Businesses Face More Exposure
Not every business will experience higher import prices equally.
Retailers selling imported merchandise have relatively direct exposure.
Manufacturers can encounter higher prices for components, machinery and raw materials.
Construction companies may be affected through imported equipment and materials.
Restaurants and hospitality businesses can encounter higher costs through food, equipment, furnishings and supplies.
Even businesses that don’t directly import anything can eventually feel the effects.
A domestic supplier that relies on imported components may pass those increases along to its customers.
A distributor may raise prices.
A transportation provider may increase charges.
Cost increases can therefore move through several companies before reaching the business or consumer ultimately paying for them.
Businesses Have Four Basic Choices
When costs rise, businesses generally have a limited number of responses.
They can raise prices.
They can accept lower margins.
They can reduce other expenses.
Or they can improve productivity enough to offset the increase.
Most companies ultimately use some combination of all four.
Pricing may be the most tempting response, especially when consumers continue spending.
But businesses should be careful.
Strong national retail sales do not mean every company’s customers will accept unlimited price increases.
Consumers can switch brands, trade down, delay purchases or simply buy less.
That makes understanding customer price sensitivity increasingly important.
Watch Gross Margin, Not Just Revenue
For owners, one of the most useful numbers to watch in this environment may be gross margin percentage.
Suppose a business sells a product for $100 that costs $60 to acquire or produce.
Its gross profit is $40.
If the cost rises to $66 and the selling price remains $100, gross profit falls to $34.
Revenue hasn’t changed.
But gross profit has dropped 15%.
Even increasing the selling price to $105 doesn’t completely restore the original economics.
That is why businesses experiencing higher sales should compare revenue growth with changes in cost of goods sold and gross margin.
The income statement may tell a very different story from the sales report.
There Is Still Good News Here
Businesses shouldn’t overlook the positive part of the August data.
Consumers continue spending.
That is considerably better for most businesses than facing rising costs at the same time demand is collapsing.
Strong consumer demand can give companies more flexibility to adjust prices, introduce premium products, improve product mix or grow volume.
But businesses need to convert that demand into profitable sales.
Revenue growth without margin discipline can create the illusion of progress.
What Businesses Should Watch
Three numbers deserve particular attention over the next several months:
Consumer spending.
If households continue buying, businesses have more room to manage higher expenses.
Import prices.
Continued increases could create additional pressure on retailers, manufacturers and other companies dependent on foreign goods and components.
Gross margins.
This is the company-level number that tells owners whether stronger sales are actually creating more economic value.
The August data present a relatively healthy picture of consumer demand.
They also contain a warning.
Sales can go up at the same time the economics of each sale get worse.
For business owners, the goal isn’t simply to sell more.
It’s to make sure that what remains after each sale is enough to justify doing the business.
Impact: Mixed
Potential beneficiaries: Retailers, restaurants, e-commerce companies and consumer businesses benefiting from continued spending.
Businesses facing greater pressure: Importers, manufacturers, retailers dependent on imported merchandise, construction companies and businesses with limited ability to pass higher costs to customers.
Sources
U.S. Census Bureau — Advance Monthly Sales for Retail and Food Services, August 2026
https://www.census.gov/retail/sales.html
U.S. Bureau of Labor Statistics — U.S. Import and Export Price Indexes, August 2026
https://www.bls.gov/news.release/ximpim.nr0.htm