Retail sales April 2023:


A shopper browses shirts at a clothing store in Atlanta, Georgia, U.S., Tuesday, Feb. 14, 2023.

Dustin Rooms | Bloomberg | Getty Images

Consumers barely kept up with inflation in April as retail sales rose but fell short of expectations, the Commerce Department reported Tuesday.

The advanced sales report showed an increase of 0.4%, below the Dow Jones estimate of 0.8%. Excluding auto figures, sales rose 0.4%, in line with expectations.

As the figures are not adjusted for inflation, the overall increase was equal to the monthly increase of 0.4% in the consumer price index. On an annual basis, sales rose only 1.6%, well below the CPI’s 5% pace.

A 0.8% decline in gasoline sales dampened spending. Sporting goods, music and book stores were down 3.3%, while furniture and home furnishings stores were down 0.7%.

Miscellaneous in-store retailers led the winners with a 2.4% increase, while online sales rose 1.2% and health and personal care retailers saw a 0.9% increase. %. Food and beverage sales increased 0.6% and 9.4% year-over-year.

Although the report indicated a struggling consumer, it was the first positive reading since January and followed a 0.7% decline in March. Treasury yields rose after the report, with initial reaction focusing more on the positive ex-autos figure, although stock futures remained negative.

Consumers still face a difficult road.

Indications point to higher interest rates ahead. In fact, Atlanta Federal Reserve Chairman Raphael Bostic told CNBC on Monday that he thinks a rate hike will be more likely than the cuts markets had forecast before the end of the year.

Consumers have accumulated higher debt to cope with persistently high inflation. Total debt topped $17 trillion in the first quarter as rising rates pushed up borrowing costs for things like mortgages and credit cards, according to a report from the New York Federal Reserve on Monday. .

“As the labor market continues to cool and the slowdown from the Fed’s aggressive monetary tightening plays out, we suspect that a further slowdown is ahead of us,” wrote Andrew Hunter, deputy chief economist at Capital Economics.

In a speech Tuesday morning, Cleveland Fed Chair Loretta Mester noted the “long-term costs” of inflation and stressed that the central bank was committed to bringing inflation back to target. by 2%.

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