There are high hopes that shoppers may help revive the economy. (Irfan Khan / Los Angeles…)
Retail sales grew in July for the first time in four months, bolstering hope that shoppers will continue to buy despite concerns over the economy and a stubbornly high unemployment rate.
The Commerce Department said that sales rose 0.8% last month, beating economist expectations of a more modest 0.3% jump. The positive sign follows three previous months of declines that included a 0.7% drop in June.
Consumer spending comprises about 70% of economic activity, and monthly retail sales figures offer a glimpse into the mind set of everyday shoppers.
All major categories -- including cars and clothing -- showed jumps in sales. Some economists point to the figures as a sign that consumer confidence is recovering and spending may drive speedier economic growth in the next few months.
Despite more jobs generated last month, the unemployment rate inched up to 8.3% in July. And with a drought in the Midwest affecting crops, consumers may be facing higher food prices in the coming months.
Last week, the U.S. Agriculture Department said the corn harvest is expected to plummet to the smallest levels in the last five years due to the drought.
A separate government report on Tuesday reported that wholesale prices in the U.S., influenced by a 35% rise in corn costs and higher prices for automobiles, jumped in July.
The producer price index, which measures fluctuations in price before it hits the consumer, reported a 0.3% rise last month, the Labor Department said.
Wholesale food prices increased 0.5% while prices on cars jumped 1.1%. The rising price of corn, which is an ingredient in products as varied as soda and cattle feed, may nudge up general food prices in the future.
US Retail Sales data by YCharts
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