U.S. retail sales were unexpectedly flat in April as higher gasoline prices pulled spending away from other goods, indicating that consumer spending was losing momentum.
The unchanged reading in retail sales last month followed a slightly downwardly revised 0.6% increase in March, the Commerce Department's Census Bureau said on Wednesday. Retail sales were previously reported to have risen 0.7% in March.
Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, gaining 0.4% in April. Sales rose 3.0% year-on-year in April.
Consumers are focusing spending on essentials and cutting back on luxuries amid higher prices. But sales have held up as a strong labor market helped households navigate the high inflation environment.
A report from the Bank of America Institute last week found lower-income spending growth remaining above that of higher-income households in April, but cautioned that "the apparent cooling in the labor market warrants close watching from here." It also flagged rising property insurance costs as a "significant headwind for consumers."
Retail sales excluding automobiles, gasoline, building materials and food services fell 0.3% last month after a downwardly revised 1.0% increase in March. These so-called retail sales were previously reported to have advanced 1.1% in March. Core retail sales correspond most closely with the consumer spending component of gross domestic product.
Consumer spending increased at a 2.5% annualized rate in the first quarter, contributing to the economy's 1.6% growth pace.
