U.S. retail sales unexpectedly rose in August as lower gasoline prices supported spending, but demand began to slow as the Federal Reserve aggressively raised interest rates.
Retail sales rose 0.3% last month, the Commerce Department reported on Thursday. Data for July was revised down which showed retail sales fell 0.4% compared to unchanged data as previously reported.
Economists even predicted sales would be flat, with estimates ranging from as low as a 0.5% decline to as high as a 0.5% increase.
The report indicated that the economy reacted positively with higher interest rates as the Fed tightened monetary policy to fight high inflation. Retail sales were supported by a tight labor market, which generated strong wage growth.
The report comes after a report of a sharp rise in monthly consumer prices in August, which bolstered expectations for a third 75 basis point rate hike by the U.S. central bank. next wednesday.
The national average gasoline price fell to about $3.82 a gallon in late August after hitting an all-time high of just over $5.00 in mid-June.
Excluding the prices of cars, gasoline, building materials and food services, retail sales were unchanged last month. Data for July was revised lower to show core retail sales rose 0.4% instead of 0.8% as previously reported.
