WASHINGTON (AP) – Americans largely ignored last month’s price increases and increased their spending in retail stores and on the Internet, boosting the economy.
Retail sales rose a seasonally adjusted 1.7% in October compared with September, the US Commerce Department said Tuesday. This is the largest gain since March, up from 0.8 percent in the previous month. Much of the increase in sales was also reflected in higher prices.
Secure employment, significant wage increases, and healthy savings in many households are at the core of stable spending. Americans also continue to buy more cars, furniture and other goods than they did before the pandemic that is taking over US ports and shipping companies and driving prices up. High spending last month means the holiday shopping season is starting off well.
Retail sales figures on Tuesday were unadjusted for inflation, which rose 0.9 percent in October, the government said last Wednesday. In some categories, such as gas station sales, which rose 3.9% in October, almost all of the increase was a jump in gas prices. Gas prices rose 3.7 percent in October, according to the government’s inflation report.
READ MORE: US consumer prices have risen 6.2 percent over the past year, the highest inflation since 1990.
However, many large retailers reported strong sales growth, another sign that high prices are not deterring consumers from spending. Walmart and Home Depot reported sales growth and solid profits, although both companies’ costs rose due to supply chain disruptions. Walmart said its consolidated gross margins fell primarily due to higher supply chain costs and other concerns.
Companies and other employers are rapidly increasing wages to fill nearly a record number of job openings. Wages for the July-September quarter jumped year-over-year, at their highest in 20 years. This gives Americans extra money to spend.
Nonetheless, inflation has undermined these gains for most Americans. Prices jumped 6.2 percent in October from a year earlier, the government said, the highest in 31 years on Wednesday.
However, a wide range of stores reported significant growth in sales, including online retailers, which reported 4 percent growth in the last month. Sales in electronics and home appliances stores rose 3.8 percent. Both numbers suggest shoppers are already stepping up their holiday shopping. Car sales rose 1.8% as car production picked up.
However, restaurant and bar sales remained flat last month, suggesting that Americans continue to spend more on goods than services, which is the main cause of supply chain problems.