US retail sales beat forecast in January

WASHINGTON • Retail sales in the United States rose more than forecast last month in a broad-based advance that indicates the consumer is well-positioned to propel the economy early this year.

The cost of living also increased last month by the most since February 2013, led by higher costs for petrol and other goods and services that indicate inflation is gathering momentum.

Labour Department data released yesterday showed that the consumer price index (CPI) rose 0.6 per cent. Compared with the same month last year, costs paid by Americans for goods and services rose 2.5 per cent, the most since March 2012.

"CPI inflation has been steady in recent months amid rising energy prices," Mr Sam Bullard, senior economist at Wells Fargo Securities, said in a note before the report.

"After the past couple of years, the transitory nature of the dip in inflation due to the decline in energy prices has come to fruition."

The Commerce Department data, meanwhile, showed that retail sales advanced 0.4 per cent last month. Excluding a decline at car dealers, sales increased the most in four months.

Ten of 13 major categories showed a pickup in the value of sales last month, led by merchants of electronics and appliances, sporting goods and clothing, according to the report.

Retail sales, excluding cars and petrol service stations, rose 0.7 per cent. This exceeded projections and is the biggest gain since April.

Car dealers' sales fell 1.4 per cent after a 3.2 per cent surge the previous month. Industry data earlier this month showed the pace of car sales cooled last month.

"We will see decent retail sales in coming months," Mr Ryan Sweet, a senior economist at Moody's Analytics, said before the report. "The job market is tight. The fundamentals continue to be very supportive. The story for 2017 will again be one of the consumer driving the economy."

Steady hiring, a modest improvement in wage growth and discounting are keeping consumers spending, providing a solid start to the first quarter.

Household purchases, which account for about 70 per cent of the economy, are projected to drive growth, while rising business optimism also suggests a pickup in investment.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on February 16, 2017, with the headline 'US retail sales beat forecast in January'. Print Edition | Subscribe