Aug. 17 (UPI) — The Commerce Department said in a monthly update on Wednesday that one factor that influences inflation, retail sales, didn’t increase or decrease from June to July — another indication that inflation may be cooling.
The department said advance monthly sales for July was about $683 billion — largely the same as it was in June. Most analysts expected that the report would show an increase of 0.1% or 0.2%.
On a year to year basis, the report said prices were about 10.3% higher than July 2021. Excluding auto sales, spending was up 0.4% for the month.
The flat month-to-month retail sales appears to signal that recent federal efforts to control inflation are having an impact.
Consumer spending accounts for about two-thirds of the U.S. economy, and Wednesday’s report signals that Americans are at least somewhat being influenced to limit spending by higher prices.
Michelle Meyer, chief U.S. economist at Mastercard, told CNBC that declines in the gross domestic product in the first and second quarters prompted some recession fears, but those fears were offset some by strong jobs data. The U.S. economy added almost 530,000 jobs in July, almost twice the number expected.
Other federal gauges recently have also indicated that inflation, which has been fueled by high energy costs, seems to be leveling off.
Last week, the department’s Consumer Price Index showed that there was no inflationary increase from June to July. Analysts had expected an increase of 0.2%. A day later, the Producer Price Index showed the first decline in prices at the wholesale level in two years. Both gauges were a clear indication that hot-running inflation may finally be cooling off.
Wednesday’s report came after retail giant Walmart reported a boost in sales in the second quarter. Experts feel that it shows higher-income earners changed their habits to find food and essential items at a lower cost. Customers also made cheaper choices while browsing the aisles, forcing the chain to cut prices on nonessential items.
The July retail sales report comes amid new efforts by lawmakers and President Joe Biden to control rising prices.
On Wednesday, Biden signed the Inflation Reduction Act, landmark legislation that invests billions in climate and healthcare efforts and makes fiscal reforms intended to exert control over runaway inflation.
Late last month, the Federal Reserve also ordered another steep interest rate hike as an added step to control inflation. The Fed has ordered a 0.75% hike at each of its last two policy meetings and a half-point hike at the meeting before that.
Gas prices, the primary driver of inflation, continued to fall on Wednesday — down 1 cent from Tuesday to $3.94 per gallon. A month ago, that average was $4.53.
“Gasoline stations [in July] were up 39.9% from July 2021,” Wednesday’s Commerce report noted.