Retail sales in the US were unexpectedly flat in September as stubbornly high inflation and rapidly rising interest rates dampened demand for goods.
The U.S. Department of Commerce said Friday (14) that September sales figures remained unchanged, while the August figure was revised up to a 0.4% increase from the initial 0.3 increase. %.
Economists had predicted retail sales growth of 0.2%.
Sales are also slowing as spending shifts to services. Mainly retail sales of goods are not corrected for inflation.
Soaring rental and health care costs are squeezing the budgets of many Americans, leading to lower spending on goods. The situation is aggravated by higher borrowing costs, which make credit more expensive.
In response to inflation, the Fed raised the benchmark rate from near zero in March to the current range of 3% to 3.25%. After data released on Thursday (13) showed that inflation rose sharply in September, interest rates are expected to raise interest rates by 75 basis points for the fourth consecutive month next month.
Major retail sales, which exclude automobiles, gasoline, building materials, and restaurant services, increased by 0.4%. The August data was revised down to a 0.2% gain from the pot.
Leading retail sales are closest to the consumer spending component of gross domestic product (GDP).
Economists estimate that consumer spending likely grew at an annual rate of less than 1.0% in the third quarter, following a 2.0% increase in the April-June quarter.
Nonetheless, GDP is expected to rebound in the final quarter after two consecutive quarters of contraction, especially as slowing domestic demand dampened imports and left a glut of unsold goods in warehouses.
The Atlanta Fed estimates that GDP grew 2.9% in the last quarter after a 0.6% contraction in the third quarter. At the end of the month, the government will release a GDP overview for the third quarter.
