Retail Sales Dip For The First Time In 11 Months
Consumers spent less on cars in May, sending retail sales down for the first time in nearly a year. Sales dropped 0.2 percent. Meanwhile, wholesale prices rose 0.2 percent, at the slowest pace in 10 months in May. Food costs fell and gas prices rose by the smallest amount in eight months.
Auto sales dropped 2.9 percent, the largest decline since February 2010, the Commerce Department said.
It was the first decline in retail sales after 10 straight increases, the Commerce Department said Tuesday.
Auto sales dropped 2.9 percent, the largest decline since February 2010. A lack of deals and the shortage of some fuel-efficient models in high demand were to blame for the decline in auto sales. The natural disasters in Japan disrupted shipments of cars and component parts to the United States.
When excluding autos, retail sales rose 0.3 percent.
The slump in retail sales was the latest report signaling that the economy has lost momentum. Consumers are struggling to deal with high gasoline prices and a slowdown in hiring. While the surge in gas prices eased in May, pump prices are still significantly higher than a year ago.
Wholesale Inflation Slows
The Labor Department said the Producer Price Index, which measures price changes before they reach the consumer, increased 0.2 percent last month. That's down sharply from a 0.8 percent rise in April and a 0.7 percent increase in March.
In the past 12 months, the index has risen 7.3 percent, the most since September 2008.
Excluding the volatile food and energy categories, the so-called "core" index also increased 0.2 percent, driven by higher prices for plastics, clothing and new cars. The core index has risen 2.1 percent in the past year.
Rapid increases in food and energy prices have driven up inflation since last fall. That has slowed the economy as consumers have had to spend more on those items and less on other goods. But food and gas prices are moderating, at least for now.
Wholesale food costs dropped 1.4 percent in May, the steepest drop in almost a year. Fruit and vegetable prices led the declines. Tomatoes plummeted 47.2 percent, the most since last June, while spinach prices dropped 48.4 percent and watermelons fell 73.7 percent, the most on record.
Gas prices, meanwhile, increased 2.7 percent in May, but that was the smallest rise since last September.
Gas prices have fallen further since last month, after nearly reaching $4 a gallon in late April. The nationwide average price dipped to just under $3.70 per gallon Tuesday, according to AAA. Still, that's up $1 from a year earlier.
Oil prices, meanwhile, fell to $97 a barrel Tuesday due to concerns that a slowing global economy will lower demand. A drop in Greece's credit rating has intensified concerns about a weakening of Europe's economy. And job creation fell sharply in the U.S. last month, the latest in a string of negative economic data.
Source:NPR
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