Rising oil prices push US September retail sales up 0.8% month-on-month, but consumer spending growth weak after excluding volatile items
U.S. retail sales in September rose by 0.8% month-on-month, exceeding expectations, mainly driven by a 6.4% surge in spending at gas stations. Consumer fuel expenses in September increased by more than 20% year-on-year, while overall household credit card spending only grew by about 0.2% month-on-month, a significant slowdown compared to the 1% growth in August.
The U.S. September retail sales data appears strong on the surface, but hidden risks lie beneath—the surge in overall figures is largely driven by high oil prices, while multiple consumer categories showed contraction during the same period. The inflation squeeze is beginning to spill over into household disposable income.
Data released by the U.S. Department of Commerce on Thursday showed that retail sales rose by 0.8% month-on-month in September, well above the market expectation of 0.3%, with a year-on-year increase of 6.3%. However, core retail sales, excluding autos and gasoline, increased by only 0.2%. The "control group" sales used to calculate the GDP's goods consumption rose merely 0.1% month-on-month, marking a sharp pullback from August. Meanwhile, data published by the U.S. Bureau of Labor Statistics on the same day showed that September producer prices recorded the largest increase in over four years, further highlighting persistent inflationary pressures.
Data from Bank of America credit and debit cards showed that consumer fuel spending in September increased by more than 20% year-on-year, while overall household card spending only rose about 0.2% month-on-month, a significant slowdown compared to August’s 1% increase. Categories such as apparel, home improvement, furniture, and dining all recorded negative growth during the same period, indicating early signs of crowding-out effects in consumption.
Oil Prices Drive Headline Figures, Core Consumption Momentum Weakens
The main driver of retail sales growth in September was gasoline stations, where sales surged by 6.4% month-on-month, the largest increase among the 13 categories. Among these, eight categories recorded growth, with furniture, electronics, and dining sales all improving. Spending at restaurants and bars rose 1.1% month-on-month.
However, beneath the overall numbers, there is clear divergence in consumption trends. According to analysts at Bank of America reviewing the bank’s September card data, while fuel spending accelerated, multiple key consumption categories softened, including: home improvement (-1.6%), department stores (-1.1%), apparel (-0.9%), furniture (-0.5%), dining (-0.4%), groceries (-0.2%), and online spending (-0.1%).
The "control group" sales, used to estimate GDP goods spending, saw a notable surge in August, but in September only grew by 0.1% month-on-month, indicating a significant deceleration in consumption momentum towards the end of the third quarter.
Persistently High Oil Prices Exacerbate Budgetary Pressure via Crowding-Out Effect
Nationwide, retail gasoline prices have remained above the politically sensitive $4 per gallon mark for three consecutive months, while diesel prices hover above $5 per gallon near historical highs, against the backdrop of ongoing global refining constraints.
Bank of America analysis shows that consumer fuel spending on credit and debit cards rose 5% month-on-month in September, a clear acceleration from 3.1% in August, while overall per-household card spending increased by just about 0.2% in the same period, far below the 1% increase in August, confirming that rising oil prices are squeezing consumption in other categories.
UBS analyst Ritu Solanki pointed out in a briefing on U.S. banking sector earnings on Wednesday that consumer spending, loan growth, and overall corporate activity remain healthy, with no broad signs of credit deterioration, though inflationary pressure persists.
Consumption Resilience and Pressure Coexist; Divergent Views Between Companies and Banks
Despite data showing increased divergence, several financial institutions remain relatively optimistic about the outlook for consumption. Reports indicate that Wells Fargo, JPMorgan Chase, and Citigroup all signaled that overall consumer resilience persists.
Meanwhile, some corporate executives have taken a more cautious view of the consumer environment. Both Domino's Pizza and Albertsons acknowledged during recent earnings calls that many consumers continue to face a challenging economic environment.
From a macro perspective, a robust job market, larger-than-usual tax refunds, and rising stock prices have been the main drivers of consumer demand this year. Additional data released Thursday show that initial jobless claims remain near historic lows, with no significant deterioration in the labor market yet evident.
However, ongoing inflationary pressure, persistently high oil prices, and the structural contraction in consumer categories continue to exert multiple layers of pressure on household budgets—an evolving trend that merits ongoing market attention.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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