The retail sector and exchange traded funds (ETFs) are a little down in the dumps today after reports show that consumers are still getting squeezed by high fuel prices.

Sales fell in July, and it was the weakest performance in five months, reports Martin Crutsinger for the Associated Press. The drop of 0.1% was the first decline since sales fell by 0.5% in February. Economists had expected a flat reading.

Auto sales were mostly to blame for the sour readings, as they fell 2.4%, says Rex Nutting for MarketWatch. Over the past few months, retail sales have barely been keeping pace with inflation.

August might look better for consumers if gas continues to fall. It’s been lower for 27 consecutive days. High prices also had people spending less time in their cars: In June, Americans drove 4.7% fewer miles (or in actual numbers: 12.2 billion fewer miles), reports Steve Gelsi for MarketWatch. Gas is now at $3.79 a gallon.

One segment of retail that has been performing well over the last several weeks is that of consumer staples, likely because whether times are good or bad, you do need the basics.

Michael Kahn for Barron’s reports that household products are getting a particularly nice ride and remain in strong positions. The sector overall has been outperforming the  S&P 500  handily: consumer staples are up about 7% in the last month, while the S&P 500 is up 4%.

  • Retail HOLDRs (RTH), up 3% year-to-date
  • SPDR S&P Retail (XRT), down 5.6% year-to-date
  • Consumer Staples Select Sector SPDR (XLP), up 0.2% year-to-date
  • Vanguard Consumer Staples (VDC), down 0.2% year-to-date

For full disclosure, some of Tom Lydon’s clients own shares of XLP.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.