WASHINGTON -- Back-to-school shopping failed to boost the pace of consumer spending last month and retal sales growth unexpectedly slowed, the Commerce Department said Friday.
With spending increasing at a modest rate, inflation remained in check in August.
Producer prices rose 0.3% from the previous month, slightly more than forecast, the Labor Department said. But during the previous year, prices were up just 1.4%.
The 0.2% rise in retail sales in August was fueled largely by demand for automobiles and was down from the 0.4% increase in July. Analysts had expected another 0.4% rise in August and the slower pace signaled consumers were cautious about their spending.
"This is not good news for retail buying this autumn and there might be no change in these conditions right into the holiday season – a projection likely to dampen spirits in the retail sector," said Kathy Bostjancic, director of macroeconomic analysis at the Conference Board.
The two reports were the last batch of government economic data before Federal Reserve policymakers meet next week to decide if the economy is strong enough to start reducing a key stimulus program.
The slower pace of retail sales growth the last two months after a 0.6% increase in June could give Fed officials pause about scaling back the central bank's $85 billion in monthly bond purchases. Tame inflation figures also could boost those on the Fed who want to continue the pace of purchases to stimulate demand.
Bostjancic said that there was no momentum in consumer spending beyond auto sales.
Auto sales were up 1% in August from the previous month and 12.3% from a year earlier. Excluding those figures, retail sales were up just 0.1% in August.
Purchases of electronics and appliances rose 0.8% and furniture sales were up 0.9%. But those increases were offset by a 0.9% drop in sales of sales of building materials and garden equipment and a 0.8% drop in clothing and accessories purchases.
The rise in producer prices was more than the 0.2% forecast and came because of higher costs for food and energy. Taking out those two volatile figures, prices were flat in August, the Labor Department said.
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