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Retail sales fall short in February 2022 as inflation slows consumer spending

Consumers continued to spend in February, but at a slower pace than expected, according to a report from the Commerce Department on Wednesday.

Advanced retail sales rose 0.3% month-on-month, slightly below the 0.4% estimate for Dow Jones. Excluding cars, sales rose by 0.2%, well below the forecast of a 0.9% increase, and after a rapid start to the year, it indicates that consumers are slowing down.

Expenditure figures were well below the price increase, which rose by 0.8% in February, according to data from the Department of Labor published last week. Retail spending numbers do not match inflation.

The biggest drop in February was in online shopping, with off-store sales falling by 3.7%.

A bright spot in the numbers released on Wednesday is that January spending was revised up 4.9%, a rate that was even stronger than the initial estimate.

The two-month numbers “suggest that real consumption growth remains relatively strong,” although some headwinds have begun to show, mainly due to rising interest rates from the Federal Reserve, said Andrew Hunter, the U.S. chief economist at Capital Economics.

“As real disposable income has been declining since mid-2021, with earlier tax cuts being cut, and more general price increases, real consumption growth is likely to slow further in the coming months, especially when it comes to personal savings. The rate is below pre-pandemic levels,” Hunter wrote. . “Also, it may not be long before the Fed’s tightening begins to affect spending on high-profile durable goods.”

Consumers, however, remain in cash, saving 2021 trillion in savings of $ 1.4 trillion, although personal savings, the latest at 6.4%, have been steadily declining during the pandemic.

Demand has risen sharply over goods and services have struggled to sustain supply. This led to an inflation rate of 7.9% in 12 months, the fastest pace in more than 40 years.

Year-on-year, retail spending rose by 17.6%, according to the Commerce Department.

The rise in gas prices has been largely driven by the rise in gas prices, with petrol station sales up 5.3% in February and 36.4% up on a year ago. Pump prices rose by about 7% in February alone, according to the Energy Information Administration.

Sales at bars and restaurants also rose sharply in the month, with a 2.5% increase and a 33% year-on-year increase. Healthcare and personal care stores fell by 1.8%, furniture stores fell by 1% and motor vehicles and parts retailers rose by 0.8%.

Retail sales fall short in February 2022 as inflation slows consumer spending

Source link Retail sales fall short in February 2022 as inflation slows consumer spending

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