Retail sales stall as shoppers react to higher prices, rates
U.S. retail sales stalled last month as shoppers grew more guarded about discretionary purchases amid the worst inflationary environment in decades and rising interest rates.
The value of overall retail purchases were little changed in September after an upwardly revised 0.4% gain in August, Commerce Department data showed Friday. Excluding gasoline, retail sales were up 0.1%. The figures aren’t adjusted for inflation.
Seven of 13 retail categories declined last month, according to the report, including a drop in receipts at auto dealers, furniture outlets, sporting goods stores and electronics merchants. The value of sales at gas stations fell 1.4%, reflecting cheaper fuel prices, but they’re now climbing.
It’s not clear the extent to which Hurricane Ian, which devastated Florida and parts of South Carolina late last month, impacted the data. That likely kept local residents from dining out while encouraging them to stock up in advance of the storm.
The weaker retail sales data underscore how consumers are feeling a bigger pinch from rampant price pressures. As inflation shows few signs of slowing, many Americans are still relying on credit cards and savings to keep up, and shelling out more on essentials leaves little leftover for discretionary purchases.
The Federal Reserve is expected to keep up its heightened pace of interest-rate hikes to quash demand across the economy, but the sales data suggest that’s already happening. The value of receipts at building materials outlets dropped 0.4% after robust gains in the prior two months, underscoring the impact of higher borrowing costs. Mortgage rates are currently the highest in two decades.