Retail Sales Increased in April After Two Month Decline
May 16, 2023
Americans boosted their retail spending in April for the first time in three months as consumers struggled to keep pace with climbing interest rates and still-high inflation.
Retail sales, which include spending at stores, online and in restaurants, climbed by a seasonally adjusted 0.4% in April from the month before, according to the Commerce Department. Retail sales posted monthly declines in February and March. While the month’s numbers bucked the trend of declines, the increase was well below the 0.8% increase that economists from Dow Jones had expected.
Retail sales are not adjusted for inflation, and the headline increase equaled the 0.4% monthly rise in the consumer price index (CPI), which suggests that consumers are not buying more, but simply keeping pace with higher prices. On an annual basis, retail sales were up 1.6% in April, far below the 4.9% rise in the CPI during the same period.
Consumers pulled back on big-ticket items like appliances, which saw sales fall 0.5%, and furniture, sales of which were down 0.7% for the month. These items are typically financed or purchased on credits, so the downturn suggests that higher interest rates are starting to take hold.
Though the report indicated consumers are struggling, it was the first positive reading since January and followed a 0.7% decline in March. Consumer spending is the primary driver of U.S. economic growth. The report adds to a mixed picture of economic activity in recent months as the Federal Reserve raised interest rates to fight inflation by slowing the economy.