Retail sales in the US rebounded more than expected last month as higher fuel prices lifted spending at gasoline stations and outlays on motor vehicles turned positive.
Retail sales grew 1.2% in August following a 0.5% decline the month before, the Census Bureau said Wednesday. The consensus in a Bloomberg-compiled survey was for a 0.8% increase last month.
Sales at gasoline stations jumped 3.1% in August after falling 0.2% the month before, while motor vehicle and parts dealers' receipts rose 0.6% following a 1.8% drop. Most of other categories also logged gains.
"Retail sales roared back to life in August following a disappointing performance in July," Ksenia Bushmeneva, economist at TD Economics, said in a report. "Stronger results in the volatile auto and gasoline categories, along with a rebound in online sales, played a role but were not the whole story, given the broad-based gains in core sales."
Prices, including at gasoline stations, rose, but so did overall volume, Bushmeneva said.
"This reinforces what we had said last month, that July's decline was an aberration caused by temporary factors," Bushmeneva wrote. "Underlying consumer demand continues to hold up, supported by a resilient labor market."
However, affordability headwinds could weigh on consumer spending heading into 2027, the economist said.
Higher US Treasury yields are lifting mortgage rates, while a surge in energy prices is further squeezing households financially, Bushmeneva said.
On Tuesday, the 10-year Treasury yield hit 5.041%, its highest since July 2007, CNBC reported. Oil prices have rallied so far this month as hostilities in the Middle East broadened. Official data showed last week that US consumer inflation and producer prices hit three-month highs in August as energy costs rose.
The average diesel price in the US rose to a fresh record of $6.3103 per gallon Wednesday, according to data from AAA, a travel organization that tracks fuel prices nationwide. Regular gas prices averaged $4.3672 per gallon Wednesday, compared with $3.1862 a year ago.
"Some of the strength we see in August is clearly tied to price increases, as these data are reported in nominal terms," Jefferies Chief US Economist Thomas Simons said in a report e-mailed to. "Gasoline is the most obvious beneficiary, and electronics might have been influenced by Apple's (AAPL) across-the-board price increases announced at the end of June and the persistent pressure on memory chip prices due to (artificial intelligence) demand, but otherwise we see mostly encouraging signs of real demand in most other categories of spending."
Wednesday's retail sales data come just hours before the Federal Reserve wraps up its two-day policy meeting. Markets are pricing in a 93% probability that the Federal Open Market Committee will lift its policy rate by 25 basis points, according to the CME FedWatch tool.
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