U.S. retail sales unchanged in July due to lower petrol prices but consumer spending is seen to be holding up. This could further ease concerns that the economy is already in recession.
The Commerce Department on Wednesday said that last month's flat retail sales reading followed a downwardly revised 0.8% increase in June. Retail sales in June were previously reported to have increased 1.0%.
Economists polled by Reuters had forecast that sales would rise 0.1%, with estimates ranging from as low as a 0.3% decline to as high as a 0.9% increase. Retail sales are mostly merchandise and are not adjusted for inflation.
Monthly consumer prices were unchanged in July as gasoline prices fell from record highs, lowering the annual rate of inflation to 8.5% from 9.1% in June.
The national average gasoline price fell to about $4.27 a gallon in the last week of July after hitting an all-time high of just over $5.00 in mid-June, the data show. Prices at the pump averaged $3.943 a gallon on Wednesday.
Excluding autos, gasoline, building materials and food services, retail sales rose 0.8% last month after rising 0.7% in June.
Consumer spending rose at the slowest pace in two years in the second quarter. The modest increase was offset by weakness in business and government spending and residential investment, resulting in a second consecutive quarter of GDP contraction. But with the labor market maintaining a brisk pace of job growth in July and industrial production hitting a record high, the economy may not be in recession.
However, the Federal Reserve's aggressive interest rate hikes to reduce demand and curb inflation have left the economy vulnerable to recession. U.S. central bank has raised its policy rate by 225 basis points since March.
Core retail sales held up even as spending shifted back to services such as restaurants, recreation and air travel. High inflation has made consumers more price sensitive, causing retailers to have excess inventory and forcing them to offer price discounts.
