Inflation Drives Prices Up As The Holiday Season Approaches
Most will be able to take the hit, but low-income families will feel it in their wallets.LEARN MORE
Data from the U.S. Commerce Department shows retail sales rose 1.7% last month, suggesting a strong start to the holiday shopping season.
Americans largely shrugged off higher prices last month and stepped up their spending at retail stores and online, providing a boost to the economy.
Retail sales rose a seasonally adjusted 1.7% in October from September, the U.S. Commerce Department said Tuesday. That's the biggest gain since March and up from 0.8% in the previous month. Much of the sales increase also reflected higher prices.
Solid hiring, strong pay raises and healthy savings for many households are underpinning robust spending. Americans are also still buying more cars, furniture and other goods than they did before the pandemic, which is overwhelming U.S. ports and shipping firms and pushing up prices. The solid spending last month suggests the holiday shopping season is off to a strong start.
Tuesday's retail sales figures aren't adjusted for inflation, which rose 0.9% in October, the government said last Wednesday. In some categories, such as gas station sales, which rose 3.9% in October, a jump in gas prices accounted for nearly all the gain. Gas prices rose 3.7% in October, according to the government's inflation report.
Still, many major retailers reported healthy sales increases, another sign that high prices aren't deterring consumers from spending. Walmart and Home Depot reported rising sales and solid profits, though both companies saw their costs climb because of supply chain disruptions. Walmart said its consolidated gross profit rate took a hit primarily due to increased supply chain costs, in addition to other issues.
A wide range of stores reported healthy sales gains, including online retailers, which reported an increase of 4% last month. Sales at electronics and appliance stores rose 3.8%. Both figures suggest shoppers are already stepping up their holiday shopping. Auto sales rose 1.8% as auto manufacturing has perked up.
Sales at restaurants and bars, however, were flat last month, a sign that Americans are still spending more on goods than services, a key reason for all the supply chain snarls.
Additional reporting by The Associated Press.
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