US retail sales rebound in June as prices rise

US retail sales rose in June, propelled by strong demand at electronics stores, apparel outlets and restaurants even as prices continued to climb for consumer goods and spending on travel and entertainment increased.

Data released by the US Census Bureau on Friday showed a 0.6 per cent increase in sales from the month before, bucking expectations for a 0.4 per cent drop, according to a Reuters poll of economists.

Retail spending had decelerated in recent months after a burst of shopping activity earlier this year. In May, sales were down 1.7 per cent as the boost from federal stimulus cheques continued to wane, revised lower from an original estimate of minus 1.3 per cent.

Shoppers are facing “sticker shock” on a range of goods from chicken to used cars. The consumer price index jumped 5.4 per cent in June from a year ago, a 13-year high, following a 5 per cent rise the previous month. Wholesale prices have also climbed, portending an increase in costs for consumers. The producer price index was up 7.3 per cent last month, the biggest yearly gain since at least 2010.

But consumers have shown a willingness to spend, with strong demand for goods, while many Americans have been booking hotel rooms and tickets for sporting events now that Covid-19 restrictions have lifted in almost every corner of the US. Spending on services, such as travel accommodation, is not captured by retail sales data.

Last month, the National Retail Federation raised its forecast for sales this year, predicting annual growth of 10.5 per cent to 13.5 per cent over 2020. It previously anticipated a 6.5 per cent increase.

The June retail sales report showed that food services including restaurants and bars continued to recover with a month-to-month gain of 2.3 per cent. Electronics and appliances, groceries, petrol stations, department stores and drug stores also generated stronger sales. Sales at car dealers, furniture stores and home and garden centres were down.

Excluding fuel, retail sales rose 0.4 per cent from May, compared with a 1.9 per cent decline in the previous month.

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