Spending at retail stores rose faster than expected in October as consumers continue to open their wallets despite scorching-hot inflation
Retail sales, a measure of how much consumers spent on a number of everyday goods, including cars, food and gasoline, rose 1.3% in October, the Commerce Department said Wednesday. Economists surveyed by Refinitiv expected sales to increase 1%.
That is a marked increase from the September data, which showed that retail sales were stagnant.
The October advance is not adjusted for inflation — which rose 0.4% last month — meaning that consumers may be spending the same but getting less bang for their buck.
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“Although Target reported disappointing third quarter results, the October retail sales report underscores that a more discerning US consumer continues to spend,” said Quincy Krosby, chief global strategist for LPL Financial. “While credit cards are being used more frequently, consumers are taking advantage of earlier-than-usual holiday sales.”
Sales were likely boosted by a one-time stimulus check worth up to $1,050 in California, as well as early holiday sales launched by several retailers.
The increase in sales last month was led by motor vehicles, with spending at auto dealers rising 1.3%. Furniture store sales increased 1.1%.
Higher gasoline prices also buoyed sales, with receipts at service stations rising 4.1% as the cost of fuel increased again last month.
Online retail sales, meanwhile, rose 1.2%. Sales at food services and drinking places also increased 1.6%.
Not all categories saw receipts increase: Electronics and appliance store sales slipped 0.3%.
The Federal Reserve has responded to the inflation crisis with the most aggressive action in decades as it races to catch up with runaway consumer prices.
Policymakers approved four back-to-back 75-basis-point interest rate hikes in June, July, September and November, and have indicated that additional super-sized increases are on the table at upcoming meetings if inflation remains abnormally high.
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Rising interest rates could force consumers to pull back on spending.