By Geoffrey Smith
Investing.com -- U.S. retail sales rose by more than expected in June, as consumers maintained their spending despite having to pay more and more for an increasingly broad range of goods and services.
The Census Bureau said sales, which aren't adjusted for inflation, rose 1.0% from May, more or less keeping track with the broad rise in consumer inflation in the same month. It also revised May's data up to show a decline of only 0.1% from an original estimate of 0.3%. In annual terms, sales were up 8.4% from June 2021.
Core sales, which exclude automobiles, also rose by 1.0%, significantly more than the 0.6% rise expected.
The data comes a day after Federal Reserve Governor Chris Waller said that if retail sales and housing data for last month come out more strongly than expected, he would be open to raising the Fed Funds target rate by a full percentage point at the Fed's policy meeting at the end of July.
However, it's not clear that they will be enough to change a market consensus that expects a move of only 75 basis points. St. Louis Federal Reserve President James Bullard, who has been outspoken on the need to tighten policy, said on Thursday he expected a hike of 'only' 75 basis points this month. That would match the Fed's biggest rate hike in 28 years in June. However, Bullard appeared to change his tune on Friday, saying that the Fed would need to raise rates to as much as 4% by the end of the year, having previously only advocated for 3.5%.
"I bet Gov. Waller regrets having flagged retail sales as something that could decide between the two," Roberto Perli, head of global policy research at Piper Sandler, said via Twitter (NYSE:TWTR) TWTR). "Taken literally, this report increases the odds of 100 bps."
Sales at gas stations posted the strongest rise of any category, with a 3.6% increase on the month. They're up a staggering 49% from a year earlier, due to the rise in global crude oil prices since Russia's invasion of Ukraine.
Spending at bars and restaurants also held up well, rising 1.0% on the month to be up 13.4% on the year, while furniture and furnishings stores posted a 1.4% gain from May.
By contrast, spending at stores selling building materials and garden supplies fell by 0.9%.