US retail sales posted the biggest increase in eight months in October, indicating demand for goods is broadly holding up despite decades-high inflation and a worsening economic outlook.
The value of overall retail purchases climbed 1.3% last month after stagnating in September, Commerce Department data showed Wednesday. Excluding gasoline and autos, retail sales were up 0.9%. The figures aren’t adjusted for inflation.
The median estimate in a Bloomberg survey of economists called for a 1% increase in total retail sales.
Nine of 13 retail categories rose last month, according to the report, including firm results at auto dealers, grocery stores and restaurants. The value of sales at gas stations climbed 4.1%, mostly reflecting higher pump prices.
The data illustrate that consumers are continuing to prove largely resilient and suggests the economy got off to a good start in the fourth quarter. That may complicate the argument posed by several Federal Reserve officials pushing for a slower pace of interest-rate hikes in the coming months, but policymakers acknowledge that inflation is still far too high.
Consumer and producer price growth both eased by more than forecast last month, spurring a rally in stock and bond markets in hopes that the Fed will downshift to smaller hikes as soon as December. After Wednesday’s retail report, two-year Treasury yields rose and US stock futures remained lower.
Even though some price pressures are easing, retailers are still seeing the impact of inflation in earnings. Home Depot Inc’s profit exceeded expectations last quarter, but was driven by higher prices rather than more transactions. Walmart Inc, meanwhile, raised its full-year guidance as US shoppers flocked to its stores to find discounts.
At the same time, Target Corp warned that shoppers are pulling back, “with guests’ shopping behaviour increasingly impacted by inflation, rising interest rates and economic uncertainty,” chief executive officer Brian Cornell said in a statement yesterday.
“Consumers kept their wallets open at the start of the fourth quarter, with strength in retail sales extending beyond expected sources like autos and gasoline. A Bloomberg Economics model suggests there’s a good chance consumers will hunker down early in 2023, but resilience in the October retail data means the Fed will need to stay the course on rate hikes at coming meetings,” say Eliza Winger and Andrew Husby, economists at Bloomberg.
Many retailers, stuck with a glut of inventory, have deployed deep discounts to try to move stock off their shelves for the crucial holiday season.


Customers seen carrying shopping bags at a mall in Anne Arundel, US. Retail sales in the US posted the biggest increase in eight months in October, indicating demand for goods is broadly holding up despite decades-high inflation and a worsening economic outlook.