Measuring sales in nominal terms, core retail sales in September rose .4% m/o/m, one tenth more than expected and August was revised up by 2 tenths. The internals though were pretty mixed overall as sales for auto’s/parts, furniture, electronics and building materials all fell as they did for misc stores (like pets, convenience, etc…) and sporting goods. Sales rose for more necessities like health/personal care and food/beverages (and helped by inflation). They also were up for department stores, clothing, online retailers and bars/restaurants. With the drop in gasoline prices, gas station sales fell for a 3rd straight month.
Overall, headline retail sales were up 8.2% y/o/y which is where headline CPI was yesterday and vs the 6.6% y/o/y core goods print. Thus, and as seen in the earnings of Pepsi and Conagra, most of the sales increase is price rather than volume. I see only a slight tweak to Q3 GDP estimates in response.
Import prices in September both headline and ex petro both fell about in line with expectations. The 3rd month in a row of a drop in the prices of ‘industrial supplies’ dragged down the ex petro figure and there was no change in price for capital goods, auto’s/parts and consumer goods.
Bottom line, the strength in the US dollar is helping to keep import prices more subdued and as seen in yesterday’s CPI figure, the rate of price increase in core goods continues to moderate. Yesterday’s figure was the lowest since May 2021. So, the inflation debate from here is how much quicker does this slow and how much is it offset by the continued acceleration in services prices, mostly led by rents.
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.