Retail sales in the United States slipped less than analysts anticipated in June on a weaker performance in the auto and gas segments, government data showed Tuesday.
The slower consumption growth adds to recent data showing that the world’s biggest economy is cooling gradually — a trend likely to raise the central bank’s confidence that it can soon begin cutting interest rates.
To ease demand and bring inflation back down sustainably, the Federal Reserve has rapidly lifted the benchmark lending rate and in recent months, held it at a decades-high level.
But in June, overall retail sales was $704.3 billion, virtually unchanged from May’s figure, according to the Department of Commerce.
Meanwhile, May’s increase was revised slightly higher.
From a year ago, the rise in June was 2.3 percent, a cooldown from the prior month as well.
Analysts have long been expecting consumers to pull back as higher interest rates bite, lifting borrowing costs for consumers and businesses.
“We believe that consumption growth will, if anything, slow further in (the second half this year), as high interest rates continue to weigh on demand and the labor market takes a further turn for the worse,” said Pantheon Macroeconomics in a note.
Among sectors, sales at auto dealers dropped 2.3 percent from May, while those at gas stations dropped 3.0 percent.
But excluding auto and gas, total retail sales was up 0.8 percent in June — indicating that there may still be some way to go yet in easing demand.
Sales at restaurants and bars was up 0.3 percent from a month prior, the Commerce Department report showed.
The Fed is set to make its next rate decision at the end of July, and analysts widely expect the central bank to begin lowering rates in September.
