Retail Sales Hold Steady with Inflation

Via U.S. Chamber of Commerce

Retail Sales Hold Steady with Inflation

Excluding volatile auto and gas sales, retail sales kept up with inflation in September.

Why it matters: This is good news. Consumer spending is keeping pace with inflation, even with economic sentiment sticking near record lows.

Big picture: This persistent strength in consumer spending is consistent with the emerging trend of “second-hand pessimism.”

  • When asked about their personal economic situation, people and businesses report they are doing well, while they are more pessimistic about the broader economy.


  • Car sales remain volatile because auto companies are still unable to operate at full capacity due to ongoing supply shortages. Spending at gas stations fell because of further price decreases. Taking away these components shows retail sales rose at about the same rate as inflation.
  • Sales were up at food and beverage stores (0.4%), clothing and accessory stores (0.5%), general merchandise stores (0.7%), food and drinking places (0.5%), health and personal care stores (0.5%), and non-store retailers (0.5%).
  • Sales down at motor vehicles and parts dealers (0.4%), building material and garden supply stores (0.4%), sporting goods and hobby stores (0.7%), miscellaneous stores (2.5%), furniture stores (0.7%), electronics and appliance stores (0.8%), and gas stations (1.4%).

Bottom line: Even as the Fed hikes interest rates to fight inflation, consumer spending remains strong. It remains to be seen whether the strength of the consumer will help avoid the “hard landing” of a recession.

—Curtis Dubay, Chief Economist, U.S. Chamber of Commerce