Relationship between inflation and retail sales

Inflation rate heats up, retail sales grow |

relationship between inflation and retail sales

The January inflation report highlights a week of economic news that also includes reports on retail sales, housing starts and industrial. WASHINGTON (Reuters) - Underlying U.S. consumer prices increased in October on the back of a pickup in rents and healthcare costs. The release of the Retail Sales Report can cause above-average volatility in the stock market. Its clarity as a predictor of inflationary pressure can cause.

Retail sales in February increased 4.

relationship between inflation and retail sales

Excluding automobiles, gasoline, building materials and food services, retail sales edged up 0. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.

U.S. retail sales falter; inflation creeping higher | Reuters

As a result of the weak core retail sales at the start of the year, economists lowered their first-quarter GDP growth estimates. The Atlanta Fed slashed its forecast to a 1. Data forecasting firm Macroeconomic Advisers cut its estimate by four-tenths of a percentage point to a 1. The economy grew at a 2. But revisions to December data on construction spending, factory orders and inventories have suggested the fourth-quarter growth estimate could be raised to a 3.

The government will publish its third estimate for fourth-quarter GDP growth later this month.

relationship between inflation and retail sales

Additional tariffs would drive up consumer prices for Canadians and Americans. In Canada, the inflation figures Friday showed it's already running hot. Other big contributors behind last month's stronger inflation figure were pricier airline tickets, restaurants and mortgage interest costs. The downward pressure on prices last month was led by cheaper costs for telephone services, travel tours and digital equipment and devices.

U.S. retail sales falter; inflation creeping higher

The June pace lifted inflation to its highest point since February when it was 2. It also moved the number farther away from the two per cent mid-point of the Bank of Canada's target range.

relationship between inflation and retail sales

The central bank, however, had been expecting inflation to rise. Last week, the central bank predicted inflation to move as high as 2.

U.S. core inflation pushes higher; retail sales rise | Reuters

Many manufacturers and retailers have been absorbing past cost increases by offsetting them through cost savings elsewhere, supplier support, product redesign or by lowering profit margins, but anecdotal evidence suggests that the ability and willingness to continue to do so is reaching its limits.

Not all retailers are feeling the effects of inflation in the same way though — the picture varies throughout the sector. John Dawson, emeritus professor of the Universities of Edinburgh and Stirling comments: Tim Denison of Synovate said: Most retailers will never have encountered inflation against this backdrop, being much more familiar with a growth model based on deflationary prices and volume increases.

Retailers therefore have less experience of the relationship between price and volume and of how consumers will respond to price rises.

What today's retail sales and inflation data say about the Canadian economy

Selling in this environment requires a very different strategy and skill set. The more discretionary the nature of the spending, the more difficult it is to sustain real price increases in downturns.

Nick Bubb of Arden Partners said: The proliferation of international sourcing means that producer and commodity price inflation in overseas economies has an increasing impact on price inflation in the UK, and makes matters more complex for British retailers.

There are differing views as to how long the inflationary environment will last, but the RTT believes that global population growth — and in particular, the growth in number of middle income groups in emerging markets — will increase pressure on commodities in the longer term.

Commodity costs in the short term might stop growing as quickly — cotton prices, for example, are set to fall back in — but it seems unlikely that they will return to the relatively benign price rises of the pre downturn era.

As such, the RTT believes this will mean there will be a fundamental change in the way the market operates.

relationship between inflation and retail sales

The maturing of the UK retail market means that growth will not be volume driven.