According to a report released by the Commerce Department on Thursday, Americans have increased their spending at retailers, defying expectations amid concerns about high inflation and rising borrowing costs.
The retail sales data for May showed a 0.3% rise from the previous month, boosted by stronger sales of auto and parts dealers.
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Economists had anticipated a decline in sales for the month, making this increase a surprising turn of events. The resilience of the economy is evident despite the bumpy ride experienced in the retail sector this year. After a significant surge of nearly 3% in January, sales dipped in February and March before recovering in April.
It’s important to note that the retail sales report only provides a partial look into consumer spending, as it excludes several services such as healthcare, travel, and hotel lodging. However, despite this limitation, the May figures indicate overall stability in consumer spending.
US consumers still face surging prices for various items
While consumer inflation has been a concern, some signs of relief exist. A recent government report revealed that prices rose by only 0.1% from April to May, marking the lowest figure in more than two years. Over the previous 12 months, prices increased by 4%.
Although US consumers are still facing surging prices for items like rent and used cars, experts believe that some of these prices may stabilise or decline in the coming months.
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By GlobalDataHowever, a closer look at “core” prices which exclude volatile food and energy costs and provide a better measure of underlying inflation trends, shows a different story. Core prices increased by 5.3% in May compared to last year’s period, significantly surpassing the Federal Reserve’s target of 2%. This indicates that underlying inflation trends remain high, warranting continued monitoring and potential policy adjustments.
The data showcases the US economy’s remarkable resilience
The recent retail sales data reveal that despite inflationary pressures and rising borrowing costs, Americans have continued to spend at retailers. While the report doesn’t capture the full extent of consumer spending, it demonstrates the economy’s resilience.
The slight easing of consumer inflation provides some relief, but certain prices, such as rent and used cars, remain elevated. It remains to be seen how these trends will evolve in the coming months, and policymakers will need to carefully monitor the situation to ensure economic stability.
