Greater consumer confidence lifts retail sales; producer prices up on gas, food
Shoppers at the Lenox Square Mall in Atlanta.
WASHINGTON - Americans stepped up their auto buying and holiday shopping in December, reflecting a boost in confidence after the election and a solid increase in hourly pay.
The Commerce Department says retail sales rose a seasonally adjusted 0.6%, following a small 0.2% gain in November.
Auto sales jumped 2.4% in December, the biggest gain since April. Gas station sales rose 2%, largely because of higher prices. Excluding autos and gas, retail sales overall were flat.
Still, online retailers in particular reported better sales. Consumer confidence has soared after the election, reaching the highest levels in nearly a decade. Small businesses are also more bullish. And Americans’ paychecks are getting fatter: Average hourly pay rose 2.9 percent in December from a year earlier, the most in seven years.
In a separate report, U.S. wholesale prices rose 0.3% in December, led higher by more expensive gas, food and cars.
The Labor Department says the producer price index, which measures price changes before they reach consumers, increased 1.6% last year. That’s the biggest 12-month gain since September 2014. Still, it is low historically and suggests inflation is largely in check.
The Federal Reserve has begun to slowly raise interest rates as the economy heals and is keeping a close eye on inflation. With wages starting to increase more quickly, companies may raise prices to offset those costs. Yet wholesale price increases remain below the Fed’s target of 2%.
December’s gain was led by a big climb in wholesale gas prices, which rose 7.8%.
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