US retail sales rise 1.7% in October amid surging inflation

WASHINGTON: The US retail sales rose 1.7 per cent in October, amid surging inflation, the Commerce Department said on Tuesday.

Retail sales totaled $638.2 billion in October, 16.3 per cent above October 2020, according to the report.

September’s retail sales were revised up from an increase of 0.7 per cent to 0.8 per cent, the report showed.

Retail sales previously dropped in May after surging in the prior two months, and then declined in July amid a Delta variant-driven Covid-19 surge.

“The 1.7 per cent increase in October retail sales bested consensus expectations and sets up holiday sales for another record gain,” Tim Quinlan and Shannon Seery, economists at Wells Fargo Securities, wrote in a note.

“But the real insight in today’s report is how wallet share is shifting as consumers re-prioritise spending amid the highest inflation in 30 years,” they continued.

Spending at restaurants was flat, which is “surprising” given that consumer prices for food away from home rose by the most since 1981 in October, according to Quinlan and Seery, who noted that maybe some diners are moving down the price curve from upscale full-service dining experiences toward “more humble fast-casual options.”

According to data released by the Labor Department last week, US inflation remained elevated in October as supply chain disruptions persisted, with the consumer price index soaring 6.2 per cent over the past 12 months, which marks the fastest pace in three decades in the country.

The index surged 0.9 per cent in October month-on-month after rising 0.4 per cent in September, with the energy index up 4.8 per cent over the month and the food index up 0.9 per cent, the report showed.