Retail sales rose as gas prices fell, and inflation cap profit

Retail sales rose as gas prices fell, and inflation cap profit

Updated at 9:06AM EST

On Thursday, the US Commerce Department indicated that US retail sales rose last month, as falling gas prices gave consumers more liquidity to spend in various sectors of the economy, indicating that demand will continue to fuel inflation.

The Commerce Department said August retail sales rose 0.3% to $683.3 billion, ahead of street expectations for a 0.1% decline. The report noted that the July total was not revised from the original estimate of the flat reading on a monthly basis, although the core reading was trimmed to a 0.4% increase.

The progress was modest, however, compared to the broader level of price increases during August, which were reported earlier this week. Core inflation, which excludes food and energy costs, rose 0.3% on the month and 6.3% on the year, while the headline reading was flat at 8.3% faster than expected. Year-on-year retail sales rose 9.1%.

Gas prices were a big component of the weak reading, with the national average cost of a gallon of gas set at about $2.84 a gallon in late August, down more than 25% from all-time highs in early June.

Excluding the auto sector, June retail sales had 0.3%, the report noted, while standalone gasoline sales were down 4.2% with prices retreating from a record high of $5,017 a gallon during June.

US stock futures were little changed after the data release, with contracts tied to the Dow Jones Industrial Average indicating a 35 point opening bell and those tied to the S&P 500 indicating a modest 4 point move.

The benchmark 3-year Treasury yield rose to 3.831% after the data was released while the dollar index was up 0.1% during the session at 109,763 against a basket of six global currencies.

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