U.S. retail sales in May saw their first drop in five months, as rampant inflation continued to terrorize consumers and upend markets, multiple outlets reported Wednesday.
The unexpected 0.3 percent plunge was driven in large part by a sharp drop in vehicle sales "due to high prices, low inventory and rising interest rates on car loans," notes The Wall Street Journal. Meanwhile, however, "spending at gas stations climbed 4 percent, likely reflecting higher fuel prices in the month," Bloomberg adds.
Consumers also tightened spending on goods like furniture, electronics, and online purchases. Such figures suggest U.S. demand for merchandise is "softening," Bloomberg writes, which might be a result of high inflation or perhaps just a greater affinity for services.
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The figures arrived prior to the Federal Reserve's decision to raise interest rates by three-quarters of a percentage point, the central bank's largest hike since 1994.
"The Fed will need to see a sustained period of weakness in domestic demand and likely labor markets before breathing a sigh of relief on the inflation front," Sal Guatieri, senior economist at BMO Capital Markets in Toronto, told Reuters.
Several economists downgraded forecasts for real spending and GDP after reviewing the Commerce Department figures, per Bloomberg. The May report also showed data for April revised lower to reflect sales for the month increasing 0.7 percent, instead of 0.9 percent as was previously reported.
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