US Retail Sales Rise More Than Expected on Gasoline Receipts

US retail sales rose in September by more than forecast as spending at gasoline stations masked mixed spending at other retailers.

The value of retail purchases, not adjusted for changes in prices, increased 0.8% after a revised 1.3% gain in August, Commerce Department data showed Thursday. Sales excluding motor vehicles and gas, however, rose only 0.2% last month.

Eight out of 13 categories posted increases, led by a 6.4% increase in the value of purchases at gas stations. While consumers pulled back on spending on things like hobbies and building materials, sales at furniture retailers, electronics stores and restaurants increased.

So-called control-group sales — which feed into the government’s calculation of goods spending for gross domestic product — increased 0.1% after surging the prior month. The measure excludes food services, auto dealers, building materials stores and gasoline stations.

The figures indicate consumers took a breather as the third quarter drew to a close and price pressures mounted. Faster inflation is taking a bigger toll on Americans’ paychecks and squeezing their budgets.

“The details point to a consumer that remained willing to spend but lost momentum after showing strong spending appetite in August,” EY-Parthenon economists Gregory Daco and Lydia Boussour said in a note. “The broader picture remains one of consumer resilience, but the inflation squeeze is becoming more visible.”

Bureau of Labor Statistics’ data out Thursday showed prices paid to producers increased in September by the most in more than four years, underscoring persistent inflation pressures.

Read More: US Producer Prices Rise by Most in More Than Four Years

Because the retail figures aren’t adjusted for inflation, the value of sales can often reflect changes in prices rather than activity. For instance, the cost of a gallon of gasoline surged in September to nearly $4.50 on average, according to American Automobile Association data.

What Bloomberg Economics Says...“The gain in headline retail sales overstates the strength of consumer demand in September, with higher gasoline prices accounting for most of the increase. The nearly flat reading on control-group sales looks more like a normalization after August’s strong gain than a sharp pullback in consumption.”— Eliza Winger, economistTo read the full note, click here

Chief executives at Domino’s Pizza Inc. and Albertsons Cos. acknowledged in recent earnings calls that many consumers remain in a challenging economic environment. Even so, Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc. have also signaled that the consumer remains resilient.

Spending at restaurants and bars, the only service-sector category in the retail report, rose 1.1%.

Consumer demand has proved robust for much of the year, bolstered by a healthy job market, larger-than-usual tax refunds and stock market gains.

Separate data out Thursday showed initial applications for unemployment insurance remained at historically low levels.