NEW YORK (AP) — Retail sales in the United States increased by 0.8% in September, following a revised 1.3% gain in August, according to the Commerce Department's report released on Thursday. Economists had anticipated a 0.3% increase for the month, as reported by FactSet. A significant portion of the spending in September was attributed to rising gasoline prices, with business at gas stations rising by 6.4%. Excluding gas station sales, retail sales rose by 0.2%.
The report indicates that while consumers are spending, the figures are not adjusted for inflation, which has been rising due to increased costs for gasoline and other goods and services. Sales at furniture and home furnishings stores increased by 1.3%, while electronics and appliance stores saw a 0.6% rise. Online retail sales grew by 0.3%, and clothing and accessories stores reported no change from the previous month.
The data does not encompass all consumer spending, such as travel and hotel stays, but the restaurant sector experienced a solid 1.1% increase. Michael Pearce, chief U.S. economist at Oxford Economics, noted that the rise in retail sales was largely driven by higher gasoline prices. He projected that consumer spending is on track for a 3.3% annualized gain in the third quarter but may lose momentum as the holiday shopping season approaches due to the impact of rising prices.
Despite the increase in spending, many Americans are facing challenges due to high gas prices, which have surged amid renewed conflict in the Middle East. The average price for regular gasoline reached $4.33 per gallon, up from less than $3 before the onset of the conflict.
Additionally, the Labor Department reported earlier this month that U.S. employers added only 29,000 jobs, and the unemployment rate increased. However, the job market has remained resilient amid various economic pressures.
Rising prices continue to pose a challenge for consumers, with the consumer price index rising by 3.7% in September compared to the previous year, up from 3.4% in August. Monthly costs increased by 0.6% from August to September, marking the largest gain in five months. Prices for toys, new and used cars, sporting goods, and shoes also saw significant increases.
Natalie Kotlyar, national leader of BDO's retail and consumer products practice, cautioned against interpreting the retail sales report as a sign of overall consumer strength. She highlighted that with inflation above 3% and high gas prices, part of the sales increase is due to higher prices, and many consumers are relying on savings and promotions to manage their budgets. Kotlyar emphasized that strong sales, coupled with wages not keeping pace with inflation, may not be sustainable, suggesting that retailers should focus on protecting profit margins and maintaining flexible inventory as they approach the holiday season.