US retail sales, consumer prices slump in March

FILE PHOTO: A shopper passes a "Sale" sign at Quincy Market in downtown in Boston, Massachusetts, U.S. January 11, 2017. REUTERS/Brian Snyder

(Source: GMA News online/Reuters | 14 April 2017)

US retail sales fell for a second straight month in March and consumer prices dropped for the first time in just over a year, supporting views that the economy lost significant momentum in the first quarter.

The Commerce Department said retail sales dropped 0.2 percent last month after a 0.3 percent decrease in February, which was the first and biggest decline in nearly a year. Compared to March last year retail sales increased 5.2 percent.

Economists polled by Reuters had forecast retail sales slipping 0.1 percent last month. Excluding automobiles, gasoline, building materials and food services, retail sales rebounded 0.5 percent after falling 0.2 percent in February.

These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.

Despite last month’s increase in core retail sales, consumer spending likely braked sharply in the first quarter after growing at a brisk 3.5 percent annualized rate in the final three months of 2016. The apparent slowdown in consumption is partly blamed on the late disbursement of income tax refunds by the government as it sought to combat fraud.

Retail sales last month were dragged down by receipts at auto dealerships, which fell 1.2 percent, decreasing for a third straight month. Sales at service stations dropped 1.0 percent, reflecting lower gasoline prices.

There were also decreases in sales at building material stores, likely as bad weather halted work at construction sites.

But there were some areas of strength. Sales at electronics and appliances stores recorded their biggest rise since June 2015 and receipts at clothing stores increased by the most in a year. Retailers have been hurt by declining mall traffic and increased competition from online retailers, led by .

In a separate report, the Labor Department said its Consumer Price Index dropped 0.3 percent in March, the first decline since February 2016, as declining costs for gasoline and mobile phone services offset rising rents and food prices.

The CPI nudging up 0.1 percent in February. In the 12 months through March, the CPI rose 2.4 percent, slowing from February’s 2.7 percent increase.

-Lucia Mukitani, Reuters

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