Retail sales rose 0.4% in April, less than expected as consumers grapple with inflation


A shopper browses for shirts at a clothing store on Tuesday, February 14, 2023 in Atlanta, Georgia, US.

Dustin Chambers | Bloomberg | Getty Images

Consumers barely kept inflation in April as retail sales rose but came in below expectations, the Commerce Department reported Tuesday.

advanced sales reports The Dow Jones saw an increase of 0.4%, below estimates of 0.8%. Excluding auto-related figures, sales rose 0.4%, which was in line with expectations.

Since the numbers haven’t been adjusted for inflation, the headline increase is equivalent to a 0.4% monthly increase in the Consumer Price Index. On an annual basis, sales grew by only 1.6%, which was much lower than the previous year. 4.9% CPI Speed,

A 0.8% drop in gasoline sales capped spending data. Sporting goods, music, and bookstores reported a decline of 3.3%, while furniture and home goods stores saw a decline of 0.7%.

Miscellaneous store retailers posted gains, with a 2.4% increase, while online sales saw a 1.2% increase and health and personal care retailers grew 0.9%. Food and beverage sales climbed 0.6% and grew 9.4% on a 12-month basis.

“Retail sales posted a modest rebound in April, but the gains mostly reflect higher prices and are unlikely to be less supportive of consumer fundamentals,” said Lydia Boussour, senior economist at EY-Parthenon.

Although the report indicated a struggling consumer, it was the first positive reading since January and followed a 0.7% decline in March. Also, the control group, which excludes auto, gas stations, building materials and supply stores and food service and drinking establishments, rose 0.7%, up from 0.4% expected.

Overall, the report was “even stronger than our previous assumptions and indicates an upturn in consumption,” Goldman Sachs economist Ronnie Walker said in a note.

Treasury yields rose after the report, as initial reaction focused more on the positive ex-auto numbers, though stocks were low in the morning business.

Consumers still face a tough road ahead.

Signs are pointing to higher interest rates ahead. In fact, the president of the Atlanta Federal Reserve rafael bastic told CNBC on Monday that he thinks rate hikes will be more likely Markets are pricing in more before the end of the year than cuts.

Consumers are taking on more debt to cope with persistently high inflation. Total debt exceeded $17 trillion in the first quarter Higher rates pushed up the cost of borrowing for items like mortgages and credit cards, according to a Monday report from the New York Federal Reserve.

“As the labor market continues to cool and the Fed continues to pull back from aggressive monetary tightening, we suspect a further recession is ahead,” wrote Andrew Hunter, deputy chief US economist at Capital Economics.

In a speech Tuesday morning, Cleveland Fed President Loretta Meester Noted the “long-term cost” of inflation and stressed that the central bank remains committed to returning inflation to the 2% target.

Tuesday saw a 0.5% gain in other economic news. industrial production in april That’s better than the 0.1% estimate according to the Federal Reserve. Capacity utilization was 79.7%, well below estimates.

This also National Association of Home Builders Sentiment Index It rose to 50 in May, which is better than the estimate of 46.

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