US retail sales weaker than expected in June

Retail sales in the United States came in weaker than expected in June, the government reported Tuesday, with consumption remaining sluggish while inflation eases.

US retail sales rose 0.2 percent to $689.5 billion last month, while May’s figure was revised slightly higher, said the Commerce Department.

This comes as consumers in the world’s biggest economy have been depleting savings accumulated during the Covid-19 pandemic, resulting in a hit on spending.

Sales involving motor vehicles and parts weakened last month, while those at food and beverage stores as well as grocery stores declined on a monthly basis, the latest report showed.

Gasoline station sales slipped 1.4 percent as well from May, while department stores saw a 2.4 percent drop.

Analysts at Pantheon Macroeconomics expect that most pent-up auto demand, which built up when supply was constrained by chip shortages between 2021 and 2022, has been met.

They added in a recent report that there is likely to be a “gradual drift lower in new vehicle sales.”

Meanwhile, “the outlook for retail sales ex-autos and gas is poor,” Pantheon analysts said in their report.

To ease demand and rein in inflation, the US central bank has been lifting interest rates rapidly in the past year, and there are signs that their moves are rippling through the economy.

In June, consumer inflation cooled to its lowest rate since early 2021, with the consumer price index rising 3.0 percent in an encouraging sign for policymakers battling cost-of-living pressures.

Source: AFP