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US retail sales rebounded in August. Americans increased vehicle purchases and went out to eat amid falling gasoline prices, though demand is cooling.
Green light for rate hikes. Americans increased their spending in August compared to July, resisting inflation in household necessities such as rent and food, which affected family budgets.
Retail sales rose an unexpected 0.3% last month, after falling 0.4% in July, the Commerce Department reported. Excluding gas stations, sales rose 0.8%.
August sales were boosted by higher vehicle spending. Purchases at dealerships of vehicles and spare parts increased by 2.8% last month.
Despite resistance from families, the figures are also not adjusted for inflation, unlike many other government reports. Indeed, sales at grocery stores rose 0.5%, fueled by rising food prices and fears of more hikes.
The weakening was noted in discretionary spending (of iPhones, tablets, furniture, clothes, shoes and luxury items), as Americans are fully aware of the effect of inflation. Restaurant business rose 1.1%, but the pace has slowed. Sales at furniture stores fell 1.3%, while online sales fell 0.7% last month after Amazon’s Prime Day boosted e-commerce sales in July.
“Retailers would probably like to be growing more, especially relative to inflation, but I’m not sure they can realistically expect much more,” said Ted Rossman, senior industry analyst at Bankrate.com. “Consumer spending habits are changing as the pandemic continues to recede and inflation remains high,” he says.
Consumer spending accounts for nearly 70% of US economic activity. Overall spending has slowed and shifted toward necessities like food, while spending on electronics, furniture, new clothes and other Unneeded items has dropped.
For the Federal Reserve, the labor market and consumer demand for products are holding up well to sharp rises in interest rates and high inflation, giving policymakers more reason to continue their aggressive rate hikes. .
with AP
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