Friday, 2 December, 2022
E-paper

US retail sales flat in Sept as higher prices bite

WASHINGTON: US retail sales were flat in September, official data showed Friday, as auto sales slowed and higher prices weighed on consumption.

Americans flush with savings have been key to the US pandemic recovery, but the Federal Reserve has been keeping a close watch on data as it fights to bring down surging inflation in the world's biggest economy without nudging it into recession.

Inflation keeps its hold on the US economy as consumer prices jumped higher than expected last month, in a blow to President Joe Biden before the midterm elections in a few weeks, reports AFP.

Amid the elevated consumer costs, retail sales in September were "virtually unchanged" from August at $684 billion, Commerce Department data showed on Friday.

The weaker-than-expected numbers came as auto sales dipped 0.6 percent from August, while gasoline stations saw sales drop 1.4 percent as fuel prices fell.

Gas prices at the pump surged after Russia's invasion of Ukraine in February, but costs have since dropped from a record high.

Meanwhile, sales at restaurants and bars, along with those at online retailers, picked up 0.5 percent from August, the latest data showed.

The data are seasonally adjusted but do not take into account changes in prices, so as costs rise, a shopping dollar does not stretch as far and American families have had to use more of their earnings on staple goods.

Overall retail sales were 8.2 percent higher than in the same period a year ago, official data showed.

A separate survey by the University of Michigan showed that consumer sentiment improved for a fourth straight month in October, although it is still below pre-pandemic levels.

"We expect consumption to decelerate in the third quarter," Rubeela Farooqi, chief US economist at High Frequency Economics, said in an analysis.

While households continue to spend overall, supported by strong job growth, higher borrowing costs and inflation will weigh on expenditures, she said.

"Cracks are beginning to emerge. A growing share of households are reporting difficulties meeting spending needs," added a Berenberg Capital Markets report.

This week's consumer data has solidified expectations of a further rate hike by the Federal Reserve at its policy meeting next month, after core inflation -- excluding food and energy -- hit a new high in recent decades.

The central bank has raised interest rates five times this year, for a total of three percentage points, and said that more hikes are likely.