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November Retail Sales Slow Sharply As Historic Inflation Surge Bites Spending

November retail sales came in well shy of Street forecasts Wednesday, suggesting the searing pace of inflation is finally starting to affect consumer spending.

U.S. retail sales rose for a fourth consecutive month in November, data from the Commerce Department indicated Wednesday, but the gains were muted amid the fastest consumer price inflation in nearly forty years.

November retail sales rose 0.3% from the previous month to a collective $639.8 billion, the Commerce Department said, well behind of the Street consensus forecast of a 0.8% gain, and 16.1% higher from the COVID-hit period in the fall of last year. The October total was revised modestly higher to a gain of 1.8%, the Commerce Department report showed. 

Stripping out auto and gasoline sales, November retail sales were up 0.2%, the Commerce Department report noted, compared to a Street consensus of 0.9%.

U.S. stock futures were little-changed immediately following the data release, with the Dow Jones Industrial Average indicating a 25 points dip and the S&P 500 priced for a modest 5 point bump.

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Benchmark 10-year Treasury note yields held at 1.44% following the data release while the dollar index was marked 0.05% lower on the session at 96.545 against a basket of six global currencies.

U.S. inflation accelerated to the fastest pace in four decades last month, surging 6.8% from last year, as energy, rent and used car costs continue to add upward pressure on consumer prices. 

So-called core inflation, which strips-out volatile components such as food and energy prices, rose 0.5% on the month, and 4.9% on the year, the highest in 30 years, the report noted, with both readings again matching the Street consensus forecast.

The CME Group's FedWatch tool, in fact, is showing a 59.9% chance of a rate hike in May of next year, up from around 35% at the beginning of November, ahead of today's Federal Reserve policy decision. Two more hikes in 2022 are also priced in by interest rate traders.

TheStreet Recommends: Inflation and Hiring Challenges Force Small Businesses to React