Brief
US consumers keep spending despite surging gas and wholesale prices
Retail sales grew as higher fuel costs lifted wholesale prices, but consumer sentiment remains bleak.
By Felo News Desk · Published
Data released on Thursday show that US retail sales rose 0.8% in September, even as gas prices and wholesale costs surged, the Independent reported.
What happened
The Labor Department’s consumer price index showed inflation at 3.7% in September, well above the Federal Reserve’s 2% target. The producer price index jumped 6.3% year‑on‑year, the biggest rise in nearly four years, with a 20% increase in gas prices driving a 1.3% monthly rise. Diesel averaged $6.32 a gallon, up from $3.66 a year earlier, according to AAA.
What the reports add
The Independent noted that the wholesale price surge lifted food costs by 1.2% from August to September, the strongest monthly gain since February. It also highlighted a 6.4% jump in spending at gas stations, while restaurant and bar sales rose 1.1%.
What was said
"Consumers may have gritted their teeth and looked through higher gas prices," said Jim Baird, chief investment officer at Plante Moran Financial Advisers, as quoted by the Independent. "They're not happy, but they're still spending." Carl Weinberg, chief economist at High Frequency Economics, wrote that transportation price spikes affect every good in the economy, noting the "bleed through" effect of energy costs on core goods.
How it came about
Earlier this week the Federal Reserve’s inflation report showed price pressures rising as oil and gas costs fed into shipping, warehousing and food prices. Despite a generally gloomy outlook in surveys, low unemployment and relatively stable job security have kept consumer spending resilient, the Independent said.
Key facts
- Retail sales rose 0.8% in September, driven by higher gas station spending. (independent.co.uk)
- Producer price index increased 6.3% year‑on‑year, the biggest rise in almost four years. (independent.co.uk)
- Diesel prices averaged $6.32 per gallon, up from $3.66 a year earlier. (independent.co.uk)
- Inflation measured by the CPI was 3.7% in September, above the Fed’s 2% target. (independent.co.uk)
Sources
- [1] independent.co.uk — originally reported as “US consumers are muscling through higher prices, but for how long?”
