Virtually flat US retail sales back case for delaying 2015 Fed interest rate hike, say economists

Chris Papadopoullos
Follow Chris
Dollars saved on cheap gasoline were not spent on other areas of the retail sector (Source: Getty)

US retailers sold $447.7bn (£290.1bn) of goods last month, hardly posting a rise compared with August as falling gasoline prices weighed on revenues at petrol stations.

Retail sales climbed by 0.1 per cent on the month in September, according to figures released today by the US Census Bureau. The sales figure also marks a 2.4 per cent climb on the same month last year.

The muted sales growth was led by an annual 8.8 per cent climb in car sales and 7.9 per cent rise in spending on food services and drinking places.

While retail sales growth is lower than levels previously hit during times of strong economic growth, economists attribute this to the fact prices have fallen.

Economists John Ryding and Conrad DeQuadros from RDQ Economics said:

The nominal [non-inflation adjusted] values of retail sales growth give a misleading sense of the strength of the data because the large drop in gasoline sales over the last three months has released spending power that has been deployed elsewhere.

However, excluding gasoline, cars and building materials, sales declined 0.1 per cent from August to September.

Paul Ashworth, chief US economist at Capital Economics, said:

Lower gasoline prices don’t appear to have spurred spending on other goods and services.

The softness of September’s retail sales figures supports our view that the Fed probably isn’t going to hike interest rates until early next year.

Related articles