Tax refunds help to lift US retail sales; drag from rising inflation looms
Yahoo Finance • • business
Key Points:
- U.S. retail sales rose 0.5% in April, marking the third consecutive month of solid gains, though much of the increase reflects inflationary pressures linked to the U.S.-backed conflict with Iran.
- Imported inflation surged at its fastest pace in four years in April, with energy and commodity prices rising sharply due to disruptions in the Strait of Hormuz, contributing to higher consumer costs.
- Despite strong stock market gains and larger tax refunds cushioning households, inflation is outpacing wage growth, savings rates are near a 3.5-year low, and lower-income consumers are increasingly struggling.
- Core retail sales, which exclude volatile categories like autos and gasoline, showed only modest inflation-adjusted growth, signaling potential softening in consumer spending as the tax season ends.
- The data reinforce expectations that the Federal Reserve will likely maintain interest rates in the 3.50%-3.75% range into next year, balancing resilient consumer spending against persistent inflation risks.