Retail sales up 0.3% in August from July amid inflation | Way of life

NEW YORK (AP) — Americans increased spending a little in August compared with July, even as soaring inflation on necessities like rent and food weighed on family budgets.

U.S. retail sales unexpectedly rose 0.3% last month after falling 0.4% in July, the Commerce Department said Thursday. Excluding service station activity, sales increased by 0.8%.

Grocery store sales rose 0.5%, helped by higher food prices

There was, however, a weakening in some areas of discretionary spending as Americans were fully aware of the bite of inflation. Restaurant activity rose 1.1%, but the pace slowed. Furniture store sales fell 1.3%. Online sales fell 0.7% last month after Amazon’s Prime Day boosted e-commerce sales in July.

“Retailers would probably like to grow more, especially relative to inflation, but I’m not sure they can reasonably expect much more,” said Ted Rossman, senior industry analyst at “Consumer habits are changing as the pandemic continues to recede and inflation remains high.

Consumer spending accounts for nearly 70% of US economic activity, and Americans have remained mostly resilient, even with inflation near four-decade highs. Yet soaring prices for everything from mortgages to milk have raised anxiety levels. Overall spending has slowed and increasingly shifted to basic necessities like food, while spending on electronics, furniture, new clothes and other non-essentials has declined.

On Thursday, it emerged that the United States had dodged a nationwide rail freight strike, which could have pushed up retail prices.

Yet inflation remains stubbornly high. Falling gas costs slowed U.S. inflation for a second consecutive month in August, but most other prices across the economy continued to rise, proof that inflation remains a heavy burden for American households.

Consumer prices rose 8.3% from a year earlier and 0.1% from July. But the jump in “core” prices, which exclude volatile food and energy costs, was particularly worrisome. It exceeded expectations and raised fears that the Federal Reserve could raise interest rates more aggressively and increase the risk of recession.

The government’s monthly retail sales report covers around a third of all consumer purchases and does not include spending on most services, ranging from plane tickets and apartment rents to cinema tickets and doctor visits. In recent months, Americans have shifted their purchases from physical goods to travel, hotel stays and air travel as the threat of the virus fades.

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