Americans ramped up their spending at retail stores in April, a sign that consumers are still weathering the inflationary storm even as prices continue to hover near a 40-year high.
Retail sales, a measure of how much consumers spent on a number of everyday goods, including cars, food and gasoline, rose 0.9% in April from the prior month, the Commerce Department said Tuesday. That was in line with expectations from Refinitiv economists, but it marked a noted slowdown from the upwardly revised 1.4% gain in March.
The so-called core retail sales, which exclude automobiles, gasoline, building materials and food services and are most closely correlated with the consumer spending aspect of the nation's gross domestic product, rose 1% in April.
The April advance – which is not adjusted for inflation, meaning that consumers may be spending the same but getting less bang for their buck – was led by a burst in spending at bars and restaurants as well as on vehicles, clothing, furniture and electronics.
Receipts at gas stations actually dropped last month as prices at the pump briefly fell from highs recorded in March. However, gas prices have since notched a new record, climbing to a national average of $4.52 per gallon, up from $3.04 one year ago.
"American consumers continued to spend more at retail stores in April, despite inflation as lower gasoline prices helped to boost spending on discretionary items," said Tuan Nguyen, a U.S. economist at RSM. "But it won’t last long as gasoline prices reached a record high in May."
There are other signs that inflation is beginning to weigh on consumers: Walmart reported earlier Tuesday that its profit took a beating in the first quarter of the year as the company grappled with soaring prices for everyday goods like food and fuel and higher costs from snarled supply chains.
The data comes as consumers face the worst inflation spike in decades The government reported last week that the consumer price index climbed 8.3% in April from the previous year, close to a four-decade high. The reading was much higher than economists expected and underscores that inflationary pressures in the economy remain strong.
Rising inflation is eating away at strong wage gains that American workers have seen in recent months: Real average hourly earnings decreased 0.1% in April from the previous month, as the inflation increase eroded the 0.3% total wage gain, according to the Labor Department. On an annual basis, real earnings actually dropped 2.6% in April.