NEW YORK — Shoppers showed their willingness to spend in September even after a better-than-expected splurge in August.
Retail sales increased 0.8% last month, after delivering a revised 1.3% gain in August, according to the Commerce Department’s report Thursday. Economists were anticipating a 0.3% increase for the month, according to FactSet.
Still, excluding business at gas stations, retail sales rose 0.2% in September. The government figures aren't adjusted for inflation, which accelerated last month as gasoline and many other goods and services became more expensive.
In fact, business at gas stations rose 6.4%, according to the Commerce Department's report, as shoppers spent more on gas per gallon.
Elsewhere, business at furniture and home furnishings stores rose 1.3%, while electronics and home appliance stores saw a 0.6% increase. Department stores posted a 1.6% sales gain. Business at online retailers rose 0.3%, according to the report.
The data offers only a snapshot of consumer spending and doesn’t include activities like travel and hotel stays. But the lone services category – restaurants – registered a 1.1% increase.
Many Americans continue to spend despite skyrocketing gas prices that have accompanied renewed fighting in the Middle East.
The average price for regular gasoline rose overnight to $4.33 per gallon Thursday, according to motor club AAA. Before the war began, the cost of gas per gallon was less than $3.
The retail sales report comes as U.S. employers added a disappointing 29,000 jobs and the unemployment rate ticked up last month, the government reported earlier this month. Still, the U.S. job market has proven solid in the face of a series of shocks, from tariffs to the Iran War.
But rising prices are still a big challenge for shoppers. The Labor Department reported on Wednesday that the consumer price index rose 3.7% in September compared with a year ago, up from 3.4% in August.
On a monthly basis, costs jumped 0.6% from August to September, the biggest gain in five months, up from a 0.4% increase the previous month. The cost of toys, new and used cars, sporting goods, and shoes all rose at a rapid clip last month, the government said.
“September’s growth shows consumers are still spending, but I wouldn’t read it as broad strength," said Natalie Kotlyar, national leader of BDO's retail and consumer products practice. "With inflation running above 3% and gas prices high, part of this gain is simply higher prices, and many shoppers are leaning on savings and promotions to stretch their budgets. ”
Kotlyar noted that strong sales alongside paychecks that aren’t keeping pace with prices can’t last forever, so retailers need to protect their profit margins and keep inventory flexible as they head into November and December.
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