Consumers were barely keeping up with inflation in April as retail sales rose but fell short of expectations, the Department of Commerce said on Tuesday.
of Pre-sale report rose 0.4%, below Dow Jones expectations of 0.8%. Excluding automotive, sales rose 0.4%, in line with expectations.
This figure is not adjusted for inflation, so the overall rate of increase is comparable to a 0.4% monthly increase in the consumer price index. On an annual basis, sales grew just 1.6%, well below the CPI pace of 4.9%.
A 0.8% drop in gasoline sales weighed on spending. Sporting goods stores, music stores and bookstores fell 3.3%, while furniture and upholstery fell 0.7%.
Other store retailers led the increase with 2.4% growth, online sales increased 1.2% and healthcare and personal care retailers increased 0.9%. Food and beverage sales increased 0.6% and increased 9.4% on a 12-month basis.
“Retail sales registered a modest recovery in April, but the increase was largely a reflection of higher prices, as consumer fundamentals became more supportive,” said Lydia Boussall, senior economist at EY-Parthenon. , a sustained upturn is unlikely.”
The report showed consumer plight, but it was the first positive figure since January and followed a 0.7% decline in March. The comparison group, which excludes autos, gas stations, building materials and supply stores and restaurants, rose 0.7%, beating expectations of 0.4%.
Goldman Sachs economist Lonnie Walker said in a memo that, overall, the report “shows an even stronger upside to the consumption outlook than previously assumed.”
Stocks fell in morning trading, but the initial reaction was to focus on strong auto-related numbers, with U.S. Treasury yields rising after the news.
Consumers still face a tough road.
It suggests that interest rates are likely to rise in the future. In fact, Atlanta Fed President Rafael Bostic told CNBC on Monday that he thinks a rate hike is more likely than the cut the market is pricing in by the end of the year.
Consumers are borrowing more to cope with persistently high inflation. Rising interest rates pushed up borrowing costs such as mortgages and credit cards, pushing total debt to more than $17 trillion in the first quarter, according to a New York Fed report on Monday.
“We suspect a further slowdown is on the horizon as the labor market continues to cool and the Fed’s aggressive monetary tightening is spilling over,” said Andrew Hunter, deputy chief U.S. economist at Capital Economics. said.
Cleveland Fed President Loretta Mester said in a speech Tuesday morning that the central bank is committed to returning inflation to its 2% target, referring to the “long-term costs” of inflation.
Other economic news on Tuesday saw a 0.5% gain. industrial production in april, The Fed said it beat expectations of 0.1%. Capacity utilization was 79.7% for him, slightly below expectations.
again, National Association of Home Builders Sentiment Index In May, the number rose to 50, beating expectations of 46.
