U.S. retail sales increased in October as shoppers faced the largest price increase in 30 years entering the holiday season.
Retail sales, a measure of how much consumers spent on goods, increased 1.7% in October, far exceeding September’s 0.7% figure, the U.S. Census Bureau reported Tuesday. Core sales, excluding autos, jumped 1.7% in October.
The Dow Jones estimated a 1.5% increase in retail sales for October and a 1% jump in core sales, CNBC reported.
“An improving Covid situation, easing supply constraints in the auto sector, and an early start to holiday shopping all boosted purchases last month,” Gregory Daco, chief U.S. economist at Oxford Economics, told the Daily Caller News Foundation.
While retail sales saw a higher than expected jump in October, inflation remains high, with the consumer price index surging 0.9% in October and 6.2% year over year. Consumers are willing to pay higher prices, despite consumer sentiment sitting at a 10 year low and inflation at a 30 year high.
“Households were still willing to open their wallets in the face of higher prices – which inflated nominal sales figures – but there is increasing evidence that higher inflation is eroding purchasing power,” Daco added.
Additionally, online shopping posted the biggest month-over-month gain, increasing 4%, while soaring gas prices pushed sales at the pump up 3.9% in October. Sales at gas stations surged 46.8% on a year-over-year basis.
“As the economy heads into 2022, an improving health situation should reinvigorate consumer confidence while a strengthening jobs recovery and strong wage gains should support income growth,” Daco added.
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