US retail sales came in below expectations for a second straight month in May as gas station revenues fell sharply, the government said Tuesday, while the data for April was revised lower.
The report suggests consumers are spending less than expected, a good sign for the Federal Reserve as it continues its fight to bring elevated inflation down to its long-term target of two percent by keeping interest rates higher.
Higher rates raise the cost of borrowing for businesses and consumers, which in turn acts to lower demand and slow the rate at which prices increase.
Overall sales came in at $703.1 billion, up 0.1 percent from April, when sales fell by a revised 0.2 percent, the Commerce Department said in a statement.
May’s data was below market expectations of a 0.3 percent rise, according to Briefing.com.
Retail sales rose were up 2.3 percent from a year ago.
“Given slowing job growth and lower savings, and the constant pressure from inflation to spend more judiciously, it’s no surprise that retail spending is downshifting,” Navy Federal Credit Union corporate economist Robert Frick wrote in a note to clients.
“We can expect retail spending to be fairly flat for the foreseeable future,” he added.
The largest monthly drop in sales was at gasoline stations, which recorded a 2.2 percent monthly decline, while sales at furniture and home furnishing stores fell by 1.1 percent from April.
There were also some areas of growth, especially among leisure businesses like sporting goods, book shops, and musical instrument stores, which saw a 2.8 percent monthly increase in sales.