Retail sales slow, but top Wall Street forecasts, as inflation pressures ease

U.S. retail sales slowed less than forecast last month, data from the Commerce Department indicated Wednesday, as muted inflation pressures and a big slide in gasoline prices added strength to broader consumer spending. 

Headline retail sales slipped 0.1% from September levels to a collective total of $705 billion, the Commerce Department said, just inside economists' forecasts of a 0.3% decline but still the largest overall spending tally since January. The September total was revised higher, as well, to a gain of 0.9% from the prior estimate of 0.7%.

The closely-tracked control group number, which excludes autos, building materials, office suppliers, gas station sales and tobacco and feeds into the government's GDP calculations, rose 0.22% following an upwardly-revised 0.7% gain in September.

Gasoline station sales were down 7.5%, the release indicated, after Energy Department data shows the national average fell by nearly 20 cents, to $3.742 per gallon, a marked slowdown when compared to the 10.3% surge that occurred over the month of August and the smaller early autumn advances. 

That may have left extra room for spending in discretionary categories, such as restaurants and apparel stores, as consumers continue to defy slowdown forecasts amid an historically resilient labor market that looks to offset renewed inflation concerns. 

U.S. stocks were little-changed following the data release, with futures contracts tied to the S&P 500 indicating a 17 point opening bell gain while those linked to the Dow Jones Industrial Average suggested a 102 point advance.

Benchmark 10-year Treasury note yields edged 4 basis points higher to 4.490% following yesterday's rally, the stocks in three months, while 2-year notes were pegged at 4.872%.

The CME Group's FedWatch now suggests the Fed will hold its benchmark rate steady next month in Washington, at between 5.25% and 5.5%, with the odds of a May rate cut pegged at around 47.9%.

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