WASHINGTON–Surprising strength in the latest consumer spending numbers could convince the Federal Reserve it needs to push up rates one more time, according to one credit union economist.
Retail sales rose 0.7% on the month, more than double the estimate that had been made by many analysts ahead of the report released by the Commerce Department for September.
Gas station sales helped fuel the number, rising 0.9% as prices at the pump rose.
"The pace of growth as well as its pervasiveness across a majority of surveyed goods and services elevates concerns of a rebound in inflation, but also dispels the notion of a weakening consumer balance sheet,” said NAFCU Economist Noah Yosif. “These numbers might persuade the FOMC to follow through on its plans for one additional rate hike before the end of the year but are more likely to result in the committee maintaining of the current fed funds rate for longer."
In its analysis, CNBC noted the numbers are not adjusted for inflation, meaning consumers more than kept up with price increases. As CUToday.info reported earlier, the consumer price index released last week showed headline inflation up 0.4% in September.
On a year-over-basis, sales rose 3.8%, compared with the 3.7% increase for the CPI.
Specifically, the new data show sales gains were broad-based during September, with the biggest rise coming at miscellaneous store retailers, which saw an increase of 3%.
Additional Data Points
In addition:
- Online sales climbed 1.1%
- Motor vehicle parts and dealers saw a 1% increase
- Food and beverage sales grew by 0.9%, good for a yearly increase of 9.2%, which led all categories, CNBC noted
- Electronics and appliances stores as well as clothing retailers both saw decreases of 0.8% on the month
The Federal Open Market Committee is next scheduled to meet in November.
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