Retail sales fell in the United States in October for the first time in three months as superstorm Sandy slammed the brakes on automobile purchases, suggesting a loss of momentum in spending early in the fourth quarter.
Sales dipped 0.3 percent, the Commerce Department said on Wednesday, after an upwardly revised 1.3 percent increase in September that was previously reported as a 1.1 percent rise.
Motor vehicle sales declined 1.5 percent, the largest fall since August last year, after increasing 1.7 percent in September. Auto manufacturers have blamed the storm for the drop in sales.
They expect auto sales to rebound in November. Automakers and dealers last week estimated that as many as a quarter million vehicles would end up in the scrap yard because of the storm.
Excluding autos, retail sales were unchanged last month after advancing 1.2 percent in September, the Commerce Department said.
The storm also likely dented sales at clothing stores, which dipped 0.1 percent after rising 0.4 percent the prior month.
Building material sales surprisingly fell 1.9 percent, defying expectations of a boost from pre-storm purchases. Building materials and garden equipment sales has increased 2.1 percent in September.
Separately, the Labor Department said producer prices unexpectedly fell in October as the cost of energy and motor vehicles tumbled.
The Labor Department said its seasonally adjusted producer price index slipped 0.2 percent last month, the first decline since May, after increasing 1.1 percent in September. It said the data had not been impacted by superstorm Sandy.
Economists polled by Reuters had expected prices at farms, factories and refineries to increase 0.2 percent last month. The decline showed there was little inflation pressure on the economy.
Wholesale prices excluding volatile food and energy costs also fell 0.2 percent, the largest fall since October 2010, after being flat in September. Economists had expected core prices to rise 0.1 percent.
Though food prices pushed higher, the overall tone of the report was consistent with benign inflation pressures as the economy struggles with sluggish demand, indicating the Federal Reserve would stick to its ultra-accommodative monetary policy stance for a while to nurse the recovery.
Consumer inflation is currently hovering around the Fed’s 2 percent target.
Overall producer prices last month were depressed by energy costs, which fell 0.5 percent as weak gasoline prices offset an acceleration in residential electricity costs. Gasoline prices fell 2.2 percent after rising 9.8 percent in September.
Food prices rose 0.4 percent after gaining 0.2 percent in September. Prices could stay elevated in the aftermath of a severe drought that pushed up the cost of grain and soybeans.
In the 12 months through October, producer prices increased 2.3 percent after rising 2.1 percent in September.
Outside food and energy, producer prices were pushed down by a sharp drop in the cost of passenger cars and light trucks. Passenger car prices fell 1.6 percent, the most since July 2009, while light truck prices fell 1.5 percent -- the largest drop since October 2010.
Retail Sales Hurt by Hurricane
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Retail Sales Hurt by Hurricane
