Inflation remains high, U.S. retail sales increased by 0.9% in April | DayNews Retail News

The increase in retail sales was driven by higher sales of autos, electronics and restaurants by the Commerce Department.

U.S. retail sales rose 0.9% in April, a strong gain that underscores Americans’ ability to keep spending more as inflation remains near a 40-year high.

The Commerce Department said Tuesday that the increase was driven by higher sales of cars, electronics and restaurants.

Sales rose even after adjusting for April’s monthly inflation rate of 0.3%. Gasoline prices fell slightly last month after surging in March following Russia’s invasion of Ukraine, keeping inflation in check.

Even after a year of seeing the prices of gasoline, food, rent and other essentials soar, consumers are providing key support for the economy. The economy contracted in the first three months of the year, but consumer and business spending still grew at a healthy pace.

Strong hiring, rapid wage growth and healthy savings levels — on average — bolstered consumers’ financial health, even as consumer prices surged 8.3% in April compared with a year ago. The increase was slightly below the four-year high reached in March.

Still, economists are closely watching whether consumer spending can continue to outpace inflation. A slowdown in spending will weigh on economic growth. While that could lower inflation, it could also push the economy into a recession.

Retail sales data suggest some supply chain disruptions may be easing. Sales at auto dealerships were up 2.2%, electronics stores were up 1% and furniture stores were up 0.7%.

Purchases at online retailers were up 2.1%, and purchases at restaurants and bars were up 2%.

Continued strength in consumer demand, fueled by a strong labor market, is a key reason why the Federal Reserve has accelerated credit tightening and cooling the economy. By doing so, Fed Chairman Jerome Powell hopes to reduce inflation without causing a recession.

The Fed raised its short-term benchmark interest rate it controls by half a percentage point at a policy meeting earlier this month, double the usual increase. Powell also hinted that the Fed may raise interest rates at its fastest pace in 33 years to curb inflation.

Source link