HomeFinancial MarketsRetail Sales Fall In February As Producer Inflation Slows

Retail Sales Fall In February As Producer Inflation Slows

U.S. retail sales fell by 0.4% in February; a decline that is expected to have come due to the previous month’s outsized increase. Despite the decline, the underlying sales momentum remained strong, with the economy continuing to expand. January retail sales data was also revised higher to show a 3.2% increase as opposed to the previous 3% rise.

“American consumers still appear to be spending at a rate that will make the Fed uncomfortable with the inflation outlook, warranting a further tap on the brakes,” Sal Guatieri, a senior economist at BMO Capital Markets in Toronto observed.

February’s decline in month-over-month retail sales was driven by a 1.8% drop in motor vehicle sales, while furniture sales sunk by 2.5%. Receipts at clothing outlets dropped by 0.8%.

The recent rise in spending is largely attributed to a relatively high labor market, which is generating a higher growth rate. Consumers are also benefitting from higher savings, with the Federal Reserve embracing a tight fiscal policy during the COVID-19 crisis.

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