US retail sales miss expectations as consumers battle higher prices

26/11/2025 04:08 AST

US retail sales grew at a slower pace than anticipated in September, government data showed Tuesday, as higher prices added to affordability concerns while firms grappled with an uptick in business costs. Overall retail sales picked up by 0.2 percent on a month-on-month basis, said the Commerce Department, slightly below analyst expectations and cooling from August's 0.6 percent increase. A separate report by the Labor Department showed that producer prices rose in line with expectations at 0.3 percent in September.

But this rise was driven by a 0.9-percent jump in goods costs, underscoring the steeper costs that businesses have been facing. As President Donald Trump's tariffs flow through the economy, all eyes are on how consumers - a key driver of the world's biggest economy - respond to price pressures.

Already, some companies have reported seeing higher costs due to Trump's new duties. The US leader recently widened tariff exemptions to cover various agriculture products as costs of living weigh on American voters. Both reports released Tuesday were delayed as a record-long government shutdown between October and mid-November halted the publications of various economic data, ranging from inflation to jobs numbers.

The 43-day stoppage hit the collection of consumer inflation and employment data for the month of October in particular, resulting in the cancellation of full reports on both fronts. Instead, available numbers will be released with November's figures.

On Tuesday, Commerce Department figures showed that retail sales in September were up 4.3 percent from a year ago. Among segments, sales at motor vehicles and parts dealers fell in September, while those at food and drinks stores eased. Sales at clothing, hobby and electronics stores all turned negative as well. In the producer price index report, goods costs rose 0.9 percent in September on the back of energy and food prices.

Producer prices
US producer prices rebounded in September as the cost of energy goods surged and producers passed on some tariffs. The Producer Price Index for final demand increased 0.3 percent after an unrevised 0.1 percent drop in August, the Labor Department's Bureau of Labor Statistics said on Tuesday. Economists polled by Reuters had forecast the PPI would rebound 0.3 percent. In the 12 months through September, the PPI increased 2.7 percent after advancing by the same margin in August. The report was delayed by the 43-day shutdown of the government. Producer goods prices jumped 0.9 percent, the largest gain since February 2024, after climbing 0.2 percent in August. Energy goods, which accelerated 3.5 percent, accounted for two-thirds of the increase in goods prices.

Wholesale services prices were unchanged after falling 0.3 percent in August, when trade margins were compressed. The decline in trade margins had suggested that wholesalers were absorbing some of President Donald Trump's sweeping tariffs on imported goods.

Kuwait Times