US retail sales rise 0.9% in April in face of sky-high inflation | Retail News

The increase in retail sales was due to larger sales of cars, electronics and restaurants, the US Department of Commerce said.

U.S. retail sales rose 0.9 percent in April, a solid gain that underscores the ability of Americans to continue increasing spending even as inflation continues at a near 40-year high.

The increase was driven by larger auto, electronics and restaurant sales, the Commerce Department said on Tuesday.

Even adjusted for inflation, which was 0.3% monthly in April, sales were up. Gasoline prices fell slightly last month, curbing inflation, after skyrocketing in March in the aftermath of Russia’s invasion of Ukraine.

Consumers are providing vital support to the economy even after a year that has seen rising prices for gasoline, food, rent and other necessities. 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 – on average – have underpinned consumers’ financial health, despite a sharp 8.3% rise in consumer prices in April from a year prior to. The increase was just below the four-decade high reached in March.

However, economists are still watching closely to see if consumer spending can continue to outpace inflation. Slower spending will drag down economic growth. While that could lower inflation, it also risks pushing the economy into recession.

Retail sales figures suggest some supply chain troubles may be easing. Sales at auto dealerships increased 2.2% and increased 1% at electronics stores and 0.7% at furniture stores.

Purchases at online retailers increased 2.1% and increased 2% at restaurants and bars.

Continued strong consumer demand, fueled by a strong labor market, is the main reason the Federal Reserve has stepped up efforts to tighten credit and cool the economy. That way, Fed Chairman Jerome Powell hopes to bring down inflation without triggering a recession.

The Fed raised the short-term benchmark interest rate it controls by half a point at its policy meeting earlier this month, double its usual increase. Mr. Powell has also signaled that the Fed will probably implement the fastest rate hike in 33 years to bring inflation to the highest level.

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