US Retail Sales rise above expectations in June despite record high fuel prices

US retail sales increased by 1% in June from upwardly revised May’s figure at -0.1% and beat forecast for 0.8% rise.

Retail sales, which exclude automobiles, gasoline, building materials and food services and more closely correspond with consumer spending component of the gross domestic product, also rose in June, after dropping previous month, implying to moderate consumer spending.

Consumers spent more on a number of goods, including increased number of motor vehicles, despite the record high fuel prices, as inflation rose to a four-decades high last month.

Annual inflation in the US hit 9.1%, the highest since 1981, pushing gasoline prices to a records highs above $5 per gallon, though consumers bought more motor vehicles, deliveries of which were delayed by supply shortages of some parts.

The US economy contracted by 1.6% in the first quarter, while expectations for the second quarter range from 1.7% contraction to 1.0% growth, but labor sector remains tight, suggesting that possible second straight contraction would no necessary mean the economy was in recession.