Retail Sales Surge Beyond September Expectations

Consumer spending in September grew more than expected, defying predictions that squeezed supply chains would reduce the monthly total, according to new data from the U.S. Census Bureau.

Retail sales overall were up 0.7% for September with it going up by 0.8% when excluding vehicles and automotive parts. Those figures trump outside estimates predicting that the number would have fallen by 0.2% and 0.5%, respectively.

Compared to the same time last year, retail sales went up by 13.9% overall.

The products that led the way for September’s spending were sporting goods, music and book sales, which saw a 3.7% increase. It was followed by spending at general stores at 2% and miscellaneous retailers at 1.8%.

Spending on gas also increased by 0.8% at a time when demand for energy in the U.S. is pushing prices upward for multiple sources. Natural gas prices have been higher in several cities already, ahead of the winter season when they are expected to rise further over stockpile concerns.

Sales for food and beverages saw a 0.7% jump despite concerns of a drop-off from fears over COVID-19 and a natural lull in the demand as the summer comes to an end.

These numbers arrive at a time when inflation concerns are mounting over the persistence of supply chain bottlenecks that are putting many stores at risk of being under stocked.

On Wednesday, new data from the Department of Labor showed that the price of food rose 0.9% and energy prices saw a higher growth at 1.3%. The Consumer Price Index (CPI), a primary benchmark for gauging inflation, also showed that prices for all items went up by 0.4%

In a bid to bring down inflation, the Biden administration has announced plans to help ease the backlog of container ships at U.S. ports, such as Los Angeles, this week. President Joe Biden said that his team secured commitments from large delivery services and retailers to work extended hours and move toward a 24-hour-a-day schedule.

The administration believes that inflation will likely be transitory. Earlier in July, Biden said that inflation was likely to be “temporary” and on Tuesday this was a view repeated by Treasury Secretary Janet Yellen. In an interview with CNBC, Yellen said that price hikes should be expected but urged consumers not to panic as she predicted supply chain concerns will ease up in the long run.

On the monetary policy side, the Federal Reserve has similarly pointed to global supply chain bottlenecks as contributing to rising inflation. Chairman Jerome Powell called the situation “frustrating”, but he and other Fed officials shared a view that the inflation is temporary.