Retail sales unexpectedly edge higher in August despite high inflation

FAN Editor

Spending at retail stores inched higher in August as the price of gasoline fell, but demand remained muted as the consumers continue to confront scorching-hot inflation.

Retail sales, a measure of how much consumers spent on a number of everyday goods, including cars, food and gasoline, rose 0.3% in August, the Commerce Department said Thursday. Economists surveyed by Refinitiv expected sales to be flat at 0%.

That is an improvement from the downwardly revised data in July, which showed that retail sales actually tumbled 0.4%. 

The August advance is not adjusted for inflation – which rose 0.1% last month – meaning that consumers may be spending the same but getting less bang for their buck. 

US shoppers in Virginia

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)

“Consumer spending has flatlined in real terms in the face of steep inflation and interest rate increases from the Fed,” said Ben Ayers, a senior economist at Nationwide. “While retail sales continue to move higher, much of this is due to higher prices which push up the dollar volume of sales. This is another indication of the general slowdown in activity across the economy this year.”

When excluding spending on autos, sales also actually fell 0.3% in August. Excluding autos and gas, sales rose 0.3%.

This is a developing story. Please check back for updates.

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