WASHINGTON: Americans spent increasing amounts on their shopping for the fourth straight month in April with inflation running at a 40-year high, as auto sales rebounded, according to government data released Tuesday.
US retail sales rose 0.9 per cent in the month to $677.7, as auto sales rose 2.2 per cent in April after declining in March, the Commerce Department said.
But when vehicles and parts are stripped out, sales jumped 1.3 per cent, far higher than analysts were expecting.
With gasoline prices on the rise due to the war in Ukraine and sanctions on Russia, sales at gasoline stations fell 2.7 per cent, after surging in the prior two months, the report said.
The healthy US consumer has underpinned the strong recovery in the world’s largest economy following the slowdown during the Covid-19 pandemic, but the surge in demand also has strained supply chains and helped push inflation to its fastest rate since the early 1980s.
“Looking ahead, consumers’ tolerance to high inflation will continue to be tested and the renewed spike in gasoline prices, along with tighter financial conditions, will weigh on households’ willingness to spend on big-ticket items,” said Kathy Bostjancic, a chief US economist at Oxford Economics.
Total retail sales were 8.2 per cent higher than April 2021, while the increase excluding autos was 10.9 per cent, according to the data.
The biggest increases in the month were for electronics, home furnishings and clothing, while restaurants and bars saw a 2.0 per cent increase and online sales increased by a similar amount.
It was a strong start to the second quarter US growth, which underscores the need for the Federal Reserve to continue on its path of raising borrowing rates to cool demand and tamp down inflation pressures, economists say
“For the Fed, these data are still showing upward momentum in growth and combined with decades-high inflation, warrant a removal of policy accommodation,” said Rubeela Farooqi, chief US economist at High Frequency Economics. – AFP
