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Retail Sales Growth Impresses In April Even As Inflation Bites

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Retail Sales Growth Impresses In April Even As Inflation Bites

Updated at 8:54AM EST

U.S. retail sales growth stabilized in April as record-high oil prices and soaring inflation failed to deter spending in the world’s largest economy, Commerce Department data showed on Tuesday.

Retail sales rose 0.9% from the previous month to $677.7 billion in April, the Commerce Department said, largely in line with Wall Street’s consensus forecast and a fourth straight monthly increase. The Commerce Department report showed that the March total was revised up sharply to 1.4% from an initial estimate of 0.5% growth.

Excluding the auto industry, retail sales rose 0.6% in March, while gasoline alone fell 2.7%, the Commerce Department reported.

“Consumers don’t seem to be deterred by inflation after a 0.9% rise in retail sales in April, after a 0.5% rise in March,” said Marwan Forzley, chief executive of payments processing group Veem. The expected travel boom, and I don’t expect that sentiment to change as we head into the next report.”

“Consumers are eager to travel, and the warmer months contributed significantly to April’s strong retail performance, which bodes well for seasonal businesses,” he added.

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U.S. stocks edged higher after the data, with the Dow Jones Industrial Average opening 385 points higher on solid gains from Home Depot (HD) – Get Home Depot, Inc. Report This offsets Walmart’s disappointing report (WMT) – Get the Walmart Company Report – The S&P 500 gained 58 points.

The yield on the benchmark 10-year U.S. Treasury note rose to 2.942% after the data, while the dollar index fell 0.6% on the day to 103.352 against a basket of six global currencies.

Gasoline prices hit a record national average of $4.523 this week, AAA data showed, as oil prices surged after Russia’s invasion of Ukraine and OPEC’s reluctance to raise collective output.

U.S. inflation moderated moderately last month from the fastest pace in 40 years, but core consumer price pressures continued to rise, suggesting readings in the world’s largest economy have continued to rise longer than expected.

So-called core inflation, which strips out volatility such as food and energy prices, rose 0.6 percent this month and 6.2 percent from a year earlier, near its highest level since February 1991.

A sharp rise in airfares (up 33% from last year), as well as used car prices, veterinary fees and the cost of delivery services drove up core prices, suggesting that inflationary pressures may be deeper.

Meanwhile, CME Group’s FedWatch tool put at least a 21.1% chance of a 75 basis-point rate hike in July, despite assurances from Fed Chairman Jerome Powell that his colleagues did not make the cut at the Open. The market committee is “actively considering” the move.

Powell will also speak at the Wall Street Journal’s “The Future of Everything” event today at 2:00 p.m. ET.

Growth in the U.S. economy has now slowed to 1.8%, compared with expectations for a contraction of -1.4% for the three months through March, according to the Atlanta Fed’s real-time benchmark GDPNow forecast tool.

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