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August retail sales inch higher

0.3% increase amid inflation follows July spending slip by ANNE D’INNOCENZIO THE ASSOCIATED PRESS | September 16, 2022 at 1:46 a.m.
Christmas decorations are displayed for sale in a Costco warehouse in August in Sheridan, Colo. Retail sales rose 0.3% last month after falling 0.4% in July, the Commerce Department reported Thursday. (AP/David Zalubowski)

Americans picked up their spending a bit in August from July, even as decades-high inflation on household necessities like rent and food took a toll on family budgets.

U.S. retail sales rose an unexpected 0.3% last month after falling 0.4% in July, the Commerce Department reported Thursday. Excluding business at gas stations, sales rose 0.8%. Sales at grocery stores rose 0.5%, helped by rising prices in food.

There was, however, weakening in some areas of discretionary spending with Americans fully aware of inflation's bite. Business at restaurants ticked up 1.1%, but the pace has slowed. Sales at furniture stores fell 1.3%. Online sales fell 0.7% last month after Amazon.com Inc.'s Prime Day boosted e-commerce sales in July.

"Retailers would probably like to be growing more, especially relative to inflation, but I'm not sure they could realistically hope for much more," said Ted Rossman, senior industry analyst at Bankrate.com. "Consumer spending habits are changing as the pandemic continues to recede and inflation remains high."

Consumer spending accounts for nearly 70% of U.S. economic activity, and Americans have remained mostly resilient with inflation near a 40 year high. Yet surging prices for everything from mortgages to milk have upped the anxiety level.

Overall spending has slowed and shifted increasingly toward necessities like food, while spending on electronics, furniture, new clothes and other nonnecessities has faded.

On Thursday, it appeared that the United States dodged a national freight rail strike, which could have sent retail prices higher.

Still, inflation remains stubbornly high. Lower fuel costs slowed U.S. inflation for a second straight month in August, but most other prices across the economy kept increasing -- evidence that inflation remains a heavy load for U.S. households.

Consumer prices rose 8.3% in August from a year earlier and 0.1% from July. But the jump in "core" prices, which exclude volatile food and energy costs, was especially worrisome. It outpaced expectations with an increase to 6.3% for the year ending in August and increased 0.6% from July, stoking fear that the Federal Reserve will increase interest rates more aggressively and raise the risk of a recession.

The U.S. government's monthly report on retail sales covers about a third of all consumer purchases but doesn't include spending on most services, ranging from plane fares and apartment rents to movie tickets and doctor visits.

In recent months, Americans have been shifting their purchases away from physical goods and more toward travel, hotel stays and plane trips as the threat of the coronavirus fades.

Print Headline: August retail sales inch higher

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