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Retail Sales Surge In October As Consumers Defy Inflation Pressures

Retail sales topped Street forecasts for the third consecutive month in October, even amid the sharpest increase in consumer price inflation in 30 years.

U.S. retail sales jumped for a third consecutive month in October, data from the Commerce Department indicated Tuesday, as consumers continue to shrug-off surging inflation pressures thanks in part to job market gains and improving wages.

October retail sales rose 1.7% from the previous month to a collective 638.2 billion, the Commerce Department said, well ahead of the Street consensus forecast of a 1.2% gain, and 16.3% higher from the COVID-hit period in the fall of last year. The September total was revised downward to a gain of 0.7%.

Stripping out auto and gasoline sales, October retail sales were up 1.4%, the Commerce Department report noted, compared to a Street consensus of 1%.

“We all know the worries, but this is yet another reminder the U.S. consumer remains extremely healthy," said LPL Financial's chief market strategist Ryan Detrick. "Don’t forget the consumer makes up two-thirds of the economy, so this is another great sign for our economy as we head into the holiday spending season.”

U.S. stock futures extended earlier gains following the data release, with the Dow Jones Industrial Average rising 190 points by late-morning the S&P 500 rising 24 point bump.

Benchmark 10-year Treasury note yields moved to a session high of 1.615% following the data release while the dollar index was marked 0.15% higher on the session at 95.536 against a basket of six global currencies.

U.S. consumer price inflation accelerated to the fastest pace in three decades last month, data from the Bureau of Labor Statistics indicated last week, as record-high energy prices and supply chain disruptions lifted the heading reading to 6.2%.

So-called core inflation, which strips-out volatile components such as food and energy prices, rose 0.6% on the month, and 4.6% on the year, the report noted, with both readings topping the Street consensus forecast.

Wage gains for the month were solid as well, however, with average hourly earnings rising 4.9% from last year as 531,000 new jobs were added to the economy, taking the headline unemployment rate to a new post-pandemic low of 4.6%.