Economic Report: U.S. retail sales grow at slower 0.3% pace as high inflation takes a bite out of the economy
The numbers: Sales at U.S. retailers rose a scant 0.3 % in February, but Americans probably bought fewer goods if high inflation is factored in.
Economists polled by The Wall Street Journal had forecast a 0.4% advance.
The previously reported 3.8% increase in sales in January, however, was revised up to 4.9%, the government said Wednesday.
Retail sales are a big part of consumer spending and offer clues on the strength of the U.S. economy. Households are still buying plenty of goods and services to keep the economic recovery going, but in some cases consumers they are just paying more.
In February, the cost of living rose a sharp 0.8%, according to the consumer price index. Inflation-adjusted sales actually fell in February.
Big picture: Americans have plenty of savings built up during the pandemic and they feel secure in their jobs. That’s given them the confidence to spend.
High inflation is altering their spending plans, however, and making them think twice about what they buy and how much. Rising prices could curb economic growth unless they relent soon, analysts say.
Market reaction: The Dow Jones Industrial Average
and S&P 500
were set to open higher in Wednesday trades. Stocks surged on Tuesday after oil prices sank and a key measure of inflation rose less than expected.