ALEXANDRIA, Va.—Retail sales were up 0.9% in April compared to March, the U.S. Department of Commerce reports, marking the fourth month in a row for increased retail spending. However, retail sales are not adjusted for inflation, so although consumers are buying more, they are getting less for their money, reports CNBC.
“Retail sales in April show that the consumer is weathering the inflationary headwinds, rising for the fourth consecutive month,” Jeffrey Roach, chief economist at LPL Financial, told CNBC. “Core categories show signs that consumers are likely dipping into savings to offset the decline in real wages. If pricing pressures can moderate enough to relieve some of the pressure on consumers, we expect a rebound in economic growth in Q2.”
Additionally, March’s retail sales numbers were revised from a 0.5% increase to a 1.4% gain. On a year-over-year basis, sales were up 8.2% and 10.9% if auto sales are excluded.
Gas station sales decreased 2.7% when energy prices declined last month but are up 36.9% from a year ago. Bars and restaurants sales were up 2% and up 19.8%, respectively, from a year ago.
Prices overall increased 0.3% in April and 0.6% excluding food and energy. On an annualized basis, the consumer price index rose 8.3% on the headline measure and 6.2% on the core measure in April. Gross domestic product fell 1.4% on an annualized basis in the first quarter, but most economists expect growth to pick up through the year.
The Wall Street Journal reports that the retail sales numbers suggest that consumers are continuing to shift spending to services from goods, as COVID-19 concerns waned and many people resumed more in-person activities.
Inflation hasn’t discouraged Americans from spending despite the highest U.S. inflation in four decades and uncertainty from the Ukraine war, economists say.
“Today’s numbers suggest that domestic demand momentum is very robust,” ING economist James Knightley told the Journal. That gives the Fed a green light to keep raising interest rates, he said, as part of its most aggressive effort in decades to curb upward price pressures.
Federal Reserve Chairman Jerome Powell said that the Fed is focused on bringing inflation down.
“We need to see inflation coming down in a convincing way,” Powell said at a Wall Street Journal event. “Until we do, we’ll keep going.”
Meanwhile, in the U.K., higher prices for food and energy pushed inflation to a 40-year high of 9% in April.