The U.S. Department of Commerce released data on Friday (15th) showing that the monthly growth rate of retail sales rose to 1% in June, beating market expectations of 0.8% and turning positive from the revised previous value of -0.1%. That means consumer spending is resilient even as inflation hits a 40-year high and raises the odds that the Federal Reserve will raise interest rates more significantly this month.
Excluding autos and gasoline, core retail sales rose 0.7% in June, beating consensus estimates of 0.1%. The figures are not adjusted for inflation.
Looking at the breakdown of the data, only 3 of the 13 retail categories fell in June, namely: construction materials, gardening equipment and supplies – 0.9%, health and personal care stores – 0.1%, and grocery stores – 0.2%.
Market analysis believes that although the data is not adjusted for inflation, the better-than-expected retail sales results show that although the Fed’s policy aims to curb consumer demand, US consumer demand is still relatively healthy, raising the probability of the Fed raising interest rates on a large scale this month. .
Fed officials are watching recent data on whether to raise rates by 3 yards (75 basis points) at the end of this month’s meeting or consider a larger rate hike of 4 yards (100 basis points).