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Retail Sales Tumble as Delta Infections, Inflation Surge Hits Spending

July retail sales fell 1.1% from the previous month, Commerce Department data showed Thursday, well shy of the 0.3% decline analysts' had forecast.

U.S. retail sales fell sharply last month, data from the Commerce Department indicated Tuesday, suggesting the recent surge in Delta-variant infections is beginning to impact consumer strength in the world's biggest economy.

July retail sales tumbled 1.1% from last month, the Commerce Department said, notably shy of the Street consensus forecast of a 0.3% decline. The June total, however, was revised modestly higher, to a gain of 0.7% on the month. Stripping out auto and gasoline sales, June retail sales were down -0.4%, the Commerce Department report noted.

Consumer price increases may have also impacted consumer spending, as July inflation was pegged 5.4% higher than last year -- the fastest rate of increase since 2008 -- according to data from the Bureau of Labor Statistics published last week.

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Job gains, however, have been robust, with 943,00 new positions added to the economy in July, paired with one of the strongest gains in average hourly earnings -- 4% -- on record.

U.S. equity futures pared earlier declines immediately following the data release, with contracts tied to the Dow Jones Industrial Average indicating a 170 point opening bell decline and those linked to the S&P 500 priced for an 18 point retreat.

Benchmark 10-year Treasury note yields, which traded at a 10-day low of 1.223% in overnight dealing, edged higher to 1.247% while the dollar index was marked 0.2% higher on the session at 92.845 against a basket of six global currencies.

Two of the countries biggest retailers -- Walmart  (WMT) - Get Walmart Inc. Report and Home Depot  (HD) - Get Home Depot, Inc. Report -- posted stronger-than-expected second quarter earnings Tuesday, but each also noted significant decreases in the pace of domestic same-store sales.