Autos drag on retail sales, price pressure subdued
By Lucia Mutikani
WASHINGTON (Reuters) - Retail sales fell in October for the first time in three months as superstorm Sandy slammed the brakes on automobile purchases, suggesting spending lost momentum early in the fourth quarter.
Other data on Wednesday showed wholesale prices falling last month for the first time since May, giving the Federal Reserve latitude to maintain its ultra-easy monetary policy stance.
Retail sales dipped 0.3 percent after a 1.3 percent increase in September, the Commerce Department said. Economists had expected sales to fall 0.2 percent.
"Sandy was a drag, but I expect we will see a gain in sales in November," said Gus Faucher, a senior economist at PNC Financial Services Group in Pittsburgh.
Part of the drop in sales was payback after two straight months of solid gains. It could also be a sign of hesitation among consumers facing the prospect of higher taxes next year.
Even excluding autos, retail sales were flat last month.
Automatic tax hikes and government spending cuts will siphon about $600 billion from the economy next year if Congress fails to act to avert them. This so-called fiscal cliff has already eroded business confidence.
"It's imperative that policymakers address the looming fiscal cliff now to give consumers some certainty heading into the holiday shopping season," said Matthew Shay, president of the National Retail Federation. Continued...