Retail sales rose 0.3% in February due to higher prices
Retail sales rose 0.3% in February due to higher prices

Retail sales rose 0.3% in February due to higher prices

After starting the year in a buying mood, Americans lowered their spending in February on gadgets, home furnishings and other discretionary items as higher prices for food, gasoline and shelter eat up more of their wallets.

Retail sales rose 0.3% after registering a revised 4.9% jump from December to January, driven by wage increases, solid employment and more money in bank accounts, according to the Ministry of Commerce. January’s rise was the biggest jump in spending since March last year, when U.S. households received a final federal stimulus check for $ 1,400.

Business in furniture and home furnishings stores fell 1% in February, while sales in electronics and white goods stores fell 0.6% General department stores fell 0.2%, while online sales fell 3.7%. Restaurant sales rose 2.5% as shoppers shift more of their spending on services as the threat of COVID-19 disappears.

And there is new pressure that could send prices even higher, namely the Russian invasion of Ukraine. Western companies have withdrawn from Russia after sending tank columns towards the capital Kiev and heavily shelling the southern port city of Mariupol and other city centers.

Earlier this month, the Ministry of Labor reported that consumer inflation, driven by rising costs for gas, food and housing, had risen by 7.9% over the past year, the sharpest increase since 1982. The 12-month period ended in February, meaning , that it does not. include most of the oil and gas price hikes that followed the start of Russia’s war on 24 February.

Raw and natural gas has risen by about 30% this year, although energy futures withdrew this week.

Many retailers are preparing for how the war will exacerbate supply shortages, with reports already emerging of limited supplies of wheat, vegetable oils, metals and electronic components such as chips.

In addition to the Russian invasion, rising COVID-19 cases and renewed restrictions in China could intensify supply chain problems.

“The current rise in non-discretionary inflation – particularly food, energy and shelter – will push households’ budgets and make them reduce their discretionary purchases, while supply chain problems will continue to limit sales growth,” wrote Lydia Boussour, chief economist at Oxford Economics. But she noted that wage increases and ample excess savings should sustain consumer spending in the coming months.

The National Retail Federation, the country’s largest retail group, predicts that growth in retail sales in the US this year will slow to between 6% and 8% from the record annual growth rate of 14% in 2021. The group mentioned rising inflation, tightening monetary policy and less fiscal stimulus . Last year’s figures marked the highest growth rate in more than 20 years. Still, this year’s projection is well above the 10-year pre-pandemic growth rate of 3.7%.

The detailed report, released on Wednesday, covers only about a third of total consumer spending and does not include services such as haircuts, hotel stays and airline tickets.

Leave a Reply

Your email address will not be published.