US retail sales remain stagnant in April

US retail sales unexpectedly remained stagnant in April, as elevated gasoline prices diverted consumer spending away from other merchandise, signalling a slowdown in consumer activity, Reuters reported on Wednesday.

The Commerce Department’s Census Bureau revealed on Wednesday that retail sales showed no change last month, following a slightly revised downward uptick of 0.6 per cent in March. Retail sales were previously reported to have risen 0.7 per cent in March

Economists surveyed by Reuters had anticipated a 0.4 per cent rise in April retail sales, which primarily consist of tangible goods and are not adjusted for inflation. April witnessed a 3.0 per cent year-on-year uptick in sales.

Consumers are prioritising essential purchases and curbing spending on non-essential items due to heightened prices. However, consumer spending has remained resilient, bolstered by a robust labour market that has helped households navigate the inflationary environment.

A recent report from the Bank of America Institute highlighted lower-income households’ continued spending growth outpacing that of higher-income counterparts in April. Nevertheless, the report cautioned against a potential slowdown in the labour market, citing rising property insurance costs as a significant challenge for consumers.

Excluding automobile sales, gasoline, building materials, and food services, retail sales declined by 0.3 per cent last month, following a revised downward surge of 1.0 per cent in March. March’s core retail sales figures were previously reported as increasing by 1.1 per cent.

Core retail sales closely align with the consumer spending component of the gross domestic product (GDP). Notably, consumer spending in the first quarter expanded at an annualised rate of 2.5 per cent, contributing to the economy’s 1.6 per cent growth rate.