Santa Is Feeling Inflation Too: US Retail Sales Fell Sharply In November

Zinger Key Points
  • U.S. retail and food services sales were down 0.6% in November.
  • Core retail sales, which excludes gasoline and autos, were down 0.2%.

The SPDR S&P 500 SPY is sliding Thursday morning after retail sales in the United States saw their steepest drop in close to a year last month, suggesting consumers are reining in spending around the holidays.

What Happened: The Commerce Department said U.S. retail and food services sales were down 0.6% in November versus estimates for a 0.1% decline. For comparison, retail sales in October were up 1.3%. 

Core retail sales, which excludes gasoline and autos, were down 0.2% versus estimates for a 0.2% increase. 

Total sales from September through November were up 7.7% from the same period a year ago.

Retail trade sales were down 0.8% from October, but up 5.4% on a year-over-year basis. Gasoline stations were up 16.2% year-over-year while food services and drinking places were up 14.1%.

Why It Matters: The report suggests that consumer demand is waning as inflation continues to eat into savings. The Federal Reserve will be paying close attention as it looks for a slowdown in consumer spending in response to rising rates.

Weaker spending trends should lead to a slowdown in economic growth, which should help tackle historically high inflation.

The report comes just a day after the Fed pulled back on its pace of rate increases, opting for a less aggressive 0.5% increase following a series of four consecutive 0.75% rate hikes.

In a press conference following the decision on rates, Fed Chair Jerome Powell reaffirmed the central bank's commitment to bringing inflation back down to its 2% goal. Although he acknowledged that recent data is encouraging, he indicated that it's not enough. 

See Also: Fed Still Needs 'Substantially More Evidence' Following 0.5% Rate Hike — Experts React With 'Famous Last Words'

"The inflation data received so far from October and November show a welcome reduction in the monthly pace of price increases, but it will take substantially more evidence to get confidence that inflation is on a sustained downward path," Powell said. 

Thursday's retail sales data suggests consumers are tightening budgets for the 2022 holiday shopping season

SPY Price Action: The SPY was down 1.11% at $394.90 Thursday morning, according to Benzinga Pro.

Photo via Shutterstock.

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Posted In: NewsRetail SalesEcon #sTop StoriesFederal ReserveCommerce DepartmentInflationJerome Powellretail
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!