Retail sales stagnant in September as high inflation eats into spending
Painfully high inflation continuing to squeeze US households
RSM U.S. chief economist Joe Brusuelas and Ameriprise Financial private wealth advisor Nancy Daoud react to wild market swings after a hotter-than-expected September CPI report on 'The Claman Countdown.'
Spending at retail stores fell flat in September as consumers continue to confront the hottest inflation in 40 years.
Retail sales, a measure of how much consumers spent on a number of everyday goods, including cars, food and gasoline, was unchanged at 0% in September, the Commerce Department said Thursday. Economists surveyed by Refinitiv expected sales to increase 0.2%.
That is a marked decline from the upwardly revised data in August, which showed that retail sales actually climbed 0.4%.
The September advance is not adjusted for inflation – which rose 0.4% last month – meaning that consumers may be spending the same but getting less bang for their buck.
INFLATION SURGED MORE THAN EXPECTED IN SEPTEMBER AS PRICES REMAIN PAINFULLY HIGH
Shoppers walk through a store at Tysons Corner Mall in Tysons, Virginia, on April 2, 2022. ((Photo by STEFANI REYNOLDS/AFP via Getty Images) / Getty Images)
"The high inflation environment is weighing on consumer morale and purchasing power, and it is forcing many households to dip into savings and use credit to finance outlays," said Gregory Daco, the chief economist at EY Parthenon. "While consumers remain willing to spend, many families are feeling increasingly constrained by elevated prices and rising interest rates."
INFLATION MAY HIT SOME RETIREES TWICE
When excluding spending on autos, sales edged up 0.1% in September. Excluding autos and gas, sales rose 0.3%.
People shop for produce at a store in Rosemead, California on June 28, 2022. - Americans' feelings about the economy slumped further in June after falling sharply the month before amid concerns over skyrocketing inflation, according to a survey relea … ((Photo by FREDERIC J. BROWN/AFP via Getty Images) / Getty Images)
Spending at general merchandise stores rose 0.7%, helping to offset a 1.4% decline in gasoline sales and a 2.5% decline in sales at miscellaneous store retailers.
Meanwhile, sales at bars and restaurants rose 0.5% in September, even as the price of food accelerated.
The data comes as consumers face the worst inflation spike in a generation: The government reported on Thursday that the consumer price index – which measures a basket of everyday goods including rent, food and health care – climbed 0.4% in September on a monthly basis and 8.2% from the previous year, higher than expected. When excluding food and gasoline, prices soared 0.6%.
The Marriner S. Eccles Federal Reserve Board Building is seen on September 19, 2022 in Washington, D.C. (Photo by Kevin Dietsch/Getty Images) ((Photo by Kevin Dietsch/Getty Images) / Getty Images)
The Federal Reserve has responded to the inflation crisis with the most aggressive action in decades as it races to catch up with runaway consumer prices. Policymakers approved three back-to-back 75-basis-point interest rate hikes in June, July and September and are expected to lift the benchmark federal funds rate by that magnitude again in November.
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Rising interest rates could force consumers to pull back on spending.