U.S. retail sales edge up 0.3 pct in February amid surging inflation

WASHINGTON, March 16 (Xinhua) -- U.S. retail sales edged up 0.3 percent in February amid surging inflation, after a revised 4.9 percent rise in the previous month, the Commerce Department reported Wednesday.

Retail sales totaled 658.1 billion U.S. dollars in February, 17.6 percent above February last year, according to the report.

"The retail sales figures are reported nominally, which is to say: not adjusted for inflation, and thus must be taken with a grain of salt today when considering how the highest inflation in 40-years is eating into consumers purchasing power," Tim Quinlan and Shannon Seery, economists at Wells Fargo Securities, wrote in an analysis.

Quinlan and Seery estimated that "real" retail sales declined 1.0 percent in February.

The consumer price index last month surged 7.9 percent from a year earlier, the largest 12-month hike since the period ending January 1982, according to the U.S. Labor Department.

The retail sales data were released as the Federal Reserve raised its benchmark interest rate for the first time since 2018 in an attempt to tame the highest U.S. inflation in four decades.

The central bank decided to raise the target range for the federal funds rate by a quarter percentage point to 0.25 to 0.50 percent and "anticipates that ongoing increases in the target range will be appropriate," the Fed said in a statement after a two-day policy meeting, adding the Ukraine crisis and related events are likely to "create additional upward pressure" on inflation and weigh on economic activity.

The January retail sales were revised from up 3.8 percent to up 4.9 percent, following a decrease of 2.5 percent in December, the Commerce Department report noted.

Retail trade sales were virtually unchanged from January. Gasoline station sales were up 36.4 percent from February 2021, while food services and drinking place sales were up 33.0 percent from last year.

"Gas prices are starting to steal wallet share from other categories, but consumers are still ratcheting up spending, just at a more modest pace," Quinlan and Seery said.

The two economists also noted that the reported official figures suggest total retail sales are a whopping 25 percent ahead of their pre-pandemic February 2020 level. "But when adjusting for the run up in consumer prices, we estimate real retail sales "just" 8 percent higher than prior to the pandemic," they said.

"Retail sales disappointed after a nice bounce back in January. The two months together are not as bad but reveal cracks in the foundation of growth," Diane Swonk, chief economist at the major accounting firm Grant Thornton, wrote in a blog.

Core retail sales, which exclude auto and gas sales and "feed more directly into GDP calculations," rose only 0.2 percent in February, Swonk noted. Vehicle sales rose 0.8 percent after a 12.9 percent surge last month, while spending at the gas pump surged 5.3 percent during the month, driven by higher prices.

"The regressive nature of higher prices at the pump showed up in the composition of that spending," Swonk said. "Those who could, bought clothing and stepped out at restaurants and bars, while spending at grocery stores and big-box discounters took it on the chin."