Retail sales rose 1 percent in June, more than expected, reversing a decline in the previous month, the Commerce Department reported Friday.
The rise in June followed a decrease of 0.1 percent in May, which was revised up from a 0.3 percent fall, a decline that, when it was first reported, surprised economists who were tracking whether consumers were feeling the pinch of higher inflation and interest rates and cutting back on spending.
The retail sales data does not adjust for price increases, so the jump in many categories reflected consumers paying more for the same amount of goods and services. Spending at gas stations rose by 3.6 percent in June, as Americans felt lots of pain at the pump. Excluding gas, retail sales were up 0.7 percent in June, which was also above economists’ expectations. Overall, nine out of the 13 main sales categories increased from last month.
“People are certainly very frustrated with the prices at the checkout stand, but it looks like they have jobs and they’re spending their paychecks despite being so disgruntled with the prices,” said Beth Ann Bovino, chief U.S. economist at S&P Global.
The Federal Reserve has been raising interest rates since March, hoping to slow down consumer and business demand and drive rapid inflation lower.
Central bank officials have acknowledged that they were concerned by a report released Wednesday that showed the Consumer Price Index surged 9.1 percent in the year through June. But several emphasized that they did not want to react too much to one data point, suggesting that for now, they would still support a three-quarter point rate increase at the central bank’s July 26-27 meeting — the same size as the central bank’s move in June.
Still, at least three suggested that incoming data on consumer spending — along with other readings on housing and inflation expectations — could factor into their thinking about whether an even larger rate increase might be necessary.
Fed officials are likely to see retail sales figures for June as a sign that American consumers continue to spend despite higher interest rates and higher prices. That could keep a bigger, full percentage-point rate increase in focus. But the figures showed more of a continuation of solid spending than a sharp surge, which may not be a decisive factor for policymakers.
