(HorizonPost.com) – Retail spending in August ticked up modestly from July fueled largely by a jump in gas prices, the Associated Press reported.
According to a Commerce Department report last Thursday, retail sales in August rose 0.6 percent compared to the revised increase of 0.5 percent in July.
Meanwhile, retail sales excluding gas, automobiles, and building materials increased only 0.1 percent in August compared to the previous month when it increased by 0.7 percent.
The spike in gas prices last month also accounted for over half of the inflation increase recorded in August, according to a Labor Department report last Wednesday. An increase in gas prices could potentially slow momentum for consumers as we head into the Christmas shopping season.
The consumer price index rose 3.7 percent year-over-year, up from the 3.2 percent year-over-year increase in July. However, excluding the food and energy categories, core inflation fell 0.4 points from 4.7 percent in July to 4.3 percent last month.
Core inflation, which excludes the volatile food and energy categories, rose 2.2 percent in August year-over-year, down from the 2.4 percent year-over-year increase in July.
Additionally, the increase in wholesale prices accelerated in August.
The Labor Department’s producer price index, which measures inflation before it impacts consumers, increased by 1.6 percent in August year-over-year, driven primarily by the spike in gas prices, leading to a sharper increase than July’s 0.8 percent year-over-year and June’s 0.1 percent.
At the same time, wholesale prices continue to rise at a slower rate than consumer costs, which could indicate that inflation is still cooling since weaker wholesale price increases result in smaller price increases for consumers.
Meanwhile, the labor market is showing signs of slowing as American employers added only 187,000 jobs last month.
Consumer inflation remains higher than the Federal Reserve’s target of 2 percent.
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