U.S. Retail Sales Unexpectedly Increased in August Despite Inflation

According to the U.S. Commerce Department, retail sales increased 0.3% in August. According to economists surveyed, retail sales, a measure of how much consumers spend on a variety of everyday items including vehicles, food, and fuel, were forecast to remain constant. That’s an improvement over the numbers from July that were negatively corrected and showed that retail sales actually decreased by 0.4%.

Since last month’s 0.1% increase in inflation was not factored into the August increase, customers may be spending the same amount but receiving less in return.

According to Ben Ayers, senior economist at Nationwide, consumer spending was actually flat in the face of strong inflation and rate hikes. While retail sales are still increasing, a major portion of this growth can be attributed to rising pricing driving increased dollar sales. This is yet another indicator of a broad decline in economic activity this year.

Sales actually fell by 0.3% in August when vehicle purchases were excluded. Sales increased by 0.3% when vehicles and gasoline were excluded. Sales at vehicle and parts retailers outperformed all other sectors this month, increasing 2.8% to somewhat offset a 4.2% drop in gasoline sales.