Retail Spending Stalls as Consumers Contend with High Inflation

October 19, 2022

U.S. retail spending was flat in September as shoppers contended with rampant inflation and higher interest rates.

Retail sales–which include purchases of goods made in-store and online, as well as spending at restaurants–were unchanged in September from the month before, a slowdown from August’s 0.4% month-over-month increase, according to the Commerce Department.

Sales at gasoline stations fell 1.4% last month, largely a reflection of falling gas prices, which were down 4.9% month-over-month in September. When sales of gasoline and automobiles are excluded, retail sales grew by 0.3% in September.

Spending on big-ticket items like electronics and furniture slowed precipitously in Spetember, falling 0.8% and 0.7% respectively. This is, in part, a reversal of pandemic-era spending habits, where consumers stuck at home shifted spending from services to goods. It also reflects the slowing housing market, as big-ticket purchases are frequently made alongside home purchases.

Unlike most government economic data, retail sales are not adjusted for inflation. Consumer prices grew 0.4% in September from August while retail spending was flat, meaning that consumers are being stretched, maintaining the same spending level but getting less for their spending.

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