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October retail sales jump up 1.7% while inflation reaches 31-year high

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Yahoo Finance Live's Emily McCormick runs down the growth seen in retail sales in October while inflation presently continues to rise.

Video Transcript

JULIE HYMAN: Up first this morning, we have retail sales data that we got to check in on. And that's as that data came in better than estimated, even when you strip out the volatile fuel component. And we want to bring in Emily McCormick to talk more about that. Emily, it's hard to parse out what role inflation and higher prices played in all of this because retail sales is a dollar amount, but nonetheless, run through the numbers for us and tell us what we know.

EMILY MCCORMICK: Absolutely, Julie. And we did see US retail sales exceed expectations for October, so this does show that the US consumer was already spending at a strong clip heading into that all-important holiday shopping season. Now, retail sales specifically were up by 1.7% month-on-month in October, topping expectations for a 1.4% rise. And if we take a look back to September, retail sales had risen by 0.8% for that month, and this was also upwardly revised from the 0.7% uptick that had previously been reported.

Now, in terms of the categories where we saw the biggest increases for October, these so-called non-store retailers or the e-commerce outlets posted the largest percent increase in sales, and this category did see a 4% monthly rise. Now, this was followed by gas station sales with a rise of 3.9%, and then electronics and appliance store sales were up by 3.8% in October. Now, on the flip side, some of the categories associated with the reopening did see sales momentum slow for the month of October.

Food service and drinking places sales for bars and restaurants were flat during the month, and clothing and clothing accessories stores sales turned negative and dropped by 0.7% after rising by about 1% in September. So a little bit of a reversal in that category specifically. Now, interestingly enough, we also saw health and personal care store sales down by 0.6%. So a couple of categories that actually did see declines in October versus September.

And in terms of what economists and what pundits have been saying about this report, I do want to flag what Guru Hariharan, who's CEO of CommerceIQ, said in a note to me this morning. He said in an email, quote, "With supply chain concerns looming over Americans, it's likely that early holiday shopping played a role in the spike of retail sales, as consumers plan ahead to avoid fulfillment delays." So potentially one of those things that contributed to sales during the month, as well as in those specific categories like electronic store sales, which, of course, had been one of the biggest gainers here.

Now, in terms of what this may mean for economic activity and for fourth quarter GDP growth overall, also want to highlight a piece of commentary that I got from Michael Pearce of Capital Economics. He noted that, quote, "The stronger rebound in goods spending is a positive sign for fourth quarter consumption growth, but the weakness in food services sales is a bad sign for the recovery in services consumption." So perhaps something to keep an eye on there as well. But again, guys, on the whole, a stronger than expected retail sales report-- those up by 1.7% on the month and by 16.3% on a year-over-year basis, guys.

JULIE HYMAN: Robust numbers, for sure. Thanks so much, Emily.