Key facts
- US retail sales rose 1.2% in August, surpassing economists' forecasts.
- The increase in retail sales was the largest since March.
- Sales excluding autos, gas, building materials, and food services surged 1.4%.
- Import prices rose 0.7% in August, exceeding expectations.
- In the 12 months through August, import prices increased 7.0%.
US retail sales rebounded sharply in August, with households increasing purchases across a variety of goods and services, including restaurants and bars. This resilience in consumer spending, combined with a significant rise in import prices, strengthens the case for the Federal Reserve to implement further interest rate hikes.
Retail sales jumped 1.2% in August, marking the largest monthly increase since March, following a revised 0.5% decrease in July. Economists had anticipated an 0.8% rise. On a year-over-year basis, sales were up 6.0% in August. The increase was partly attributed to higher gasoline prices and restocking for the new school year. Sales at non-store retailers saw a notable 2.6% increase, while clothing stores rose 0.7%. Vehicle and parts dealers saw a 0.6% increase, furniture stores 0.9%, and electronics and appliance stores 1.6%. Sporting goods, hobby, musical instrument, and book retailers collectively increased by 1.2%. However, sales at building material and garden equipment retailers declined by 0.2%.
Core retail sales, excluding automobiles, gasoline, building materials, and food services, surged 1.4% in August, significantly exceeding the 0.4% rise forecast by economists and marking the largest gain since September 2024. This category closely aligns with the consumer spending component of gross domestic product, which is projected to contribute to a third-quarter economic growth rate exceeding 2.0% annually, following a 1.5% growth rate in the previous quarter.
In a separate report, import prices rose 0.7% in August, driven by increases in capital and consumer goods costs, surpassing economists' expectations of a 0.4% rise. This marks the largest increase since August 2022, following two months of declines. The strength in import prices suggests ongoing inflationary pressures.