Growth in US retail sales stalled in August after a pitched battle over spending in Congress led consumer confidence to crumble, data showed today.
Sales were unchanged from a month earlier, a substantially weaker reading than the average forecast for a 0.2% rise. Sales growth during July was revised downward to 0.3%.
Consumer spending accounts for about two-thirds of US economic activity, and the Commerce Department data suggests growth in the first two months of the third quarter was weaker than many economists expected.
Excluding cars, sales increased 0.1% in August, below forecasts for a 0.3% gain. Sales of motor vehicles and parts fell 0.3%. An increase in sales of electronics, petrol and food were balanced with drops in purchases of cars, furniture and clothes. Spending at restaurants and bars also dipped.
Consumer confidence plunged in August after a bruising battle over the US budget slammed stock prices and pushed the nation to the brink of default. The US Congress let a debate over spending go down to the wire early last month, nearly leaving the government unable to pay its bills. The country's debt was then downgraded by a major rating agency.
Stripping out sales of petrol, cars and building materials, ''core'' retail sales rose 0.1% in August, pointing to some resilience. Excluding the 0.3% rise in petrol sales, retail sales were flat.
US economic growth slowed sharply in the first half of the year, and pressure on the Federal Reserve has been increasing for the central bank to do more to boost growth.
Wholesale prices flat, as inflation pressures ease
US companies paid the same amount for wholesale goods last month as a drop in energy prices offset higher food costs. Excluding the volatile food and energy categories, core wholesale prices edged up 0.1%, the smallest increase in three months.
The figures indicate that inflation pressures are easing. The Labor Department says the producer price Index, which measures price changes before they reach the consumer, was unchanged in August, after a 0.2% rise in July.
In the past 12 months, the index has increased 6.5%, mostly due to higher petrol and food costs. That is the smallest 12-month rise since March, though much bigger than the annual changes late last year.
