Higher prices weigh on underlying retail demand
SPY•September retail sales rose 0.8% month over month, largely reflecting higher gasoline prices. Excluding gasoline stations, sales rose 0.2%, while control group sales increased 0.1%, implying negative inflation-adjusted growth.
1. Sales growth and prices
September retail sales rose 0.8% month over month, largely reflecting higher gasoline prices rather than stronger underlying demand. Excluding gasoline stations, nominal sales increased 0.2%, and control group sales rose 0.1%, implying negative inflation-adjusted growth.
2. Spending varies by household
Restaurant and bar sales increased 1.1%, consistent with resilient spending among higher-income households benefiting from wealth gains and rising interest income. Third-quarter consumer spending remained solid, but strength was concentrated in August; July and September showed weaker demand. Further Federal Reserve rate hikes risk straining lower- and middle-income households without materially slowing spending among wealthier consumers.
