US Retail Sales Up 1.7% Despite Inflation Fears

Americans may be concerned about rising prices, but that apparently has not stopped them from continuing to do their holiday shopping this year.

On Tuesday, the U.S Census Bureau released its latest retail sales report which found that sales at retailers, online and offline, were up by a seasonally adjusted 1.7% in October compared to September. This number eclipses the same period last year, surpassing it by 16.3% overall.

Shopping for food at grocers and restaurants only saw marginal gains. Spending at grocery stores increased 1.1% from September whereas spending at restaurants saw no change in the last month. Clothing and personal care shopping were the only categories of goods that posted declines while still staying above the same levels last year.

Online shopping grew the most at 4.0% followed by spending on gasoline and building materials, each growing at 3.9% and 2.8% respectively.

The solid boost in retail sales comes at a time when Americans are feeling their most pessimistic in a decade, largely because of rising inflation. Last week, the University of Michigan’s Consumer Sentiment Index found that consumers were feeling their most pessimistic since 2011 during the recovery from the Great Recession.

Prices have spiked with inflation. The latest Consumer Price Index and Producer Price Index measurements from the Department of Labor each showed goods becoming more expensive to buy, including core goods like food and energy.

Why inflation has jumped so suddenly has been attributed to a combination of global supply chain bottlenecks and a surge of pent-up demand as the COVID-19 pandemic eased restrictions for shoppers.

The Biden administration and the Federal Reserve have been cautious about the rise in inflation and have taken steps to address it.

Last month, President Joe Biden pledged to make reducing ongoing supply chain bottlenecks and cutting down a shipping backlog a priority. He has announced partnerships with private companies to keep deliveries from U.S. ports operational 24/7 and get goods to market.

The Federal Reserve has cut back on its multibillion-dollar monthly asset purchases after its quarterly meeting last week. Starting this month, the central bank will begin gradually reducing its purchases by an additional $15 billion every month.