WASHINGTON, Oct 15 (Reuters) – US retail sales increased more than expected in September, boosted by higher gasoline prices, but spending elsewhere was moderate, which could temper economists’ expectations for another quarter of robust consumer spending growth.
Retail sales rose 0.8% last month after an upwardly revised 1.3% jump in August, the Commerce Department’s Census Bureau said on Thursday. Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, rising 0.3%.
Estimates ranged from being unchanged to an increase of 0.7%. The Census Bureau last month revised its retail sales estimates to account for historical corrections and incorporate newly available survey data.
Prior to the revisions, August retail sales were estimated to have increased 1.2% before being trimmed to a 1.1% gain.
Rising gasoline prices accounted for most of the increase in retail sales last month. Gasoline prices soared 7.1% in September, data from the US Energy Information Administration showed, driving inflation higher during that month.
The oil price shock from the US-Israeli war with Iran is putting a strain on consumers, especially those in the lower part of what economists call a K-shaped economy.
Inflation-adjusted wages fell again in September. Though consumers have continued to spend, higher-income households are doing the heavy lifting, partly thanks to stock market gains.
The Federal Reserve’s Beige Book report on Wednesday said most districts had “reported little or no change in overall consumer spending” between late August and early October. It noted that even in districts like Dallas, where firms reported solid retail sales, there were “some reports of lower-income customers being more cautious with spending.”
Bank of America Institute reported this week an increase in the usage of buy now, pay later. While it said the pace was not “overly concerning,” it added that “nearly one in every five households that use BNPL has a repayment of over $500.”
Retail sales excluding automobiles, gasoline, building materials and food services edged up 0.1% last month after surging 1.2% in August, the Census Bureau said.
Economists had forecast these so-called core retail sales, which correspond most closely with the consumer spending component of gross domestic product, gaining 0.3%.
Economists expect that consumer spending grew at around a 3.4% annualized rate in the third quarter after rising at a 3.8% pace in the April-June quarter.
Growth estimates for the July-September quarter are around a 3.0% rate. The economy grew at a 2.2% pace in the second quarter.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama )
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