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Us retail sales were flat in September from a month earlier, below the revised value of 0.4 per cent and the expected 0.2 per cent. Year-on-year, retail sales rose 8.2% in September from a year earlier. The monthly rate of retail sales in August was revised up to 0.4 per cent, compared with 0.3 per cent previously.
1. The lower-than-expected data reflected the weakening of consumer persistence, but showed no signs of rupture.
Retail sales are mainly spent on goods and are not adjusted for inflation. Soaring rents and health care costs are squeezing the budgets of many Americans, causing consumers to spend less on goods.
The flat data show neither the overheating of consumption that requires more aggressive interest rate increases, nor the rapid deterioration that will prompt the Fed to weaken the rate hikes. Although consumers are still willing to spend, many households, especially those with low and middle incomes, are increasingly constrained by rising prices and interest rates. Overall spending will continue to slow as inflation persists and tighter monetary policy begins to have a more meaningful impact on consumption.
2. Consumer spending continues to shift to the service sector, and consumers are continuing to cut back on alternative consumption.
Retail sales are also slowing as spending shifts to services, and alternative consumption continues to fall. Amid stubbornly high inflation and rapidly rising interest rates, households have reduced their purchases of cars and other big-ticket goods such as electronics and appliances.
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