US retail sales were flat in September, official data showed today, as car sales slowed and higher prices weighed on consumption.
Americans flush with savings have been key to the US pandemic recovery, but the Federal Reserve has been keeping a close watch on data as it fights to bring down surging inflation in the world's biggest economy without nudging it into recession.
Inflation keeps its hold on the US economy as consumer prices jumped higher than expected last month, in a blow to President Joe Biden before the midterm elections in a few weeks.
Amid the elevated consumer costs, retail sales in September were "virtually unchanged" from August at $684 billion, Commerce Department data showed today.
The weaker-than-expected numbers came as car sales dipped 0.6% from August, while gasoline stations saw sales drop by 1.4% as fuel prices fell.
Gas prices at the pump surged after Russia's invasion of Ukraine in February, but costs have since dropped from a record high.
Meanwhile, sales at restaurants and bars, along with those at online retailers, picked up 0.5% from August, the latest data showed.
The data are seasonally adjusted but do not take into account changes in prices, so as costs rise, a shopping dollar does not stretch as far and American families have had to use more of their earnings on staple goods.
Overall retail sales were 8.2% higher than in the same time a year ago, official data showed.
The consumer data this week, however, has solidified expectations of a further rate hike by the Federal Reserve at its policy meeting next month, after core inflation - excluding food and energy - hit a new high.
The Fed has raised interest rates five times this year, for a total of three percentage points, and said that more hikes are likely.
"We expect consumption to decelerate in the third quarter," Rubeela Farooqi, chief US economist at High Frequency Economics, said in an analysis.
While households continue to spend overall, supported by strong job growth, higher borrowing costs and inflation will weigh on expenditures, she added.
