The US consumer spending indicator rose solidly in November, suggesting enough of a boost in the economy so that the Federal Reserve may raise interest rates for the first time in nearly a decade.
Retail sales in the US rose 0.2% in November, although the underlying consumer spending index climbed strongly due to the great start in the year’s holiday shopping season.Department of Commerce, overall retail sales rose just 0.2% in November, as car purchases fell and lower gasoline prices decreased revenues in service stations.
Underlyings sales rise
However, underlying sales, which exclude cars, gasoline, building materials and food services rose 0.6% last month.
Consumer spending, which accounts for over two-thirds of economic activity, surprisingly slowed in September and October. The slowdown occurred despite a labor market adjustment, which has begun to raise household income.
The underlying sales result was above economists’ estimation, which had anticipated an increase of 0.4% in November.
In a separate report, the Labor Department said its producer price index rose 0.3% last month after falling 0.4% in October.
November marked the tenth consecutive 12-month decline in the index. The strong dollar and continued declines in oil prices amid oversupply and slowing global growth have dampened price pressures, inflation persistently falling below 2%.