But even after excluding volatile gasoline sales, consumers barely increased their spending.
The Commerce Department said Wednesday that retail sales dipped 0.2% in May. That followed a revised 0.2% decline April. The back-to-back declines were the first in two years.
The weakness reflected a 2.2% plunge in gasoline station sales. Still, excluding gas station sales, retail spending rose just 0.1% in May. And it dropped 0.1% in April. That left retail spending roughly flat outside of gas sales for the two months, a sign that slower job growth and paltry wage increases may be leading consumers to pull back on spending.
A second report Wednesday said cheaper gas pushed down the government's measure of wholesale prices by 1% in May, biggest drop in nearly 3 years.
The steep drop in gasoline costs drove down a measure of wholesale prices in May by the most since July 2009. But outside the food and energy categories, prices increased moderately.
The Labor Department says that the producer price index fell 1% in May, after dropping 0.2% in April. Gasoline prices dropped nearly 9%, the most in almost three years. Food costs also fell.
The index measures price changes before they reach the consumer. Excluding food and energy, the so-called "core" index increased 0.2%, the same as in April.
In the past 12 months, wholesale prices are up only 0.7%, the smallest gain since October 2009. The core index has risen 2.7% in the same period. That's the same pace as last month.
The retail sales report said Americans did spend more in May on big purchases. Sales of cars, furniture and appliances all increased.
And lower gas prices could give consumers more to spend in coming months on restaurant meals, clothes, appliances and other discretionary purchases that drive growth.
Gas prices have tumbled since peaking April 6. On Tuesday, the average nationally price for a gallon of gas averaged $3.54, according to AAA. That's down 19 cents from a month earlier.
Total retail sales fell in April to $404.6 billion. That's slightly below March's record level of $406.2 billion and 21.6% higher than the recession low hit in March 2009.
The retail sales report is the government's first look at consumer spending, which drives 70% of economic activity.
But economists are worried that consumer spending may weaken if income growth does not revive.
Workers' average hourly earnings have risen just 1.7% in the 12 months ended in May. That's well below the pace of inflation during this period.
And job growth has slowed since the start of the year. Employers added 226,000 jobs on average during the first three months of the year; they have added an average of 73,000 jobs a month since April.
If job growth does not revive, that could act as a drag on consumer spending in coming months.
In the January-March quarter, overall economic growth slowed to an annual rate of 1.9%, down from a 3% rate of increase in the October-December period.
The strength in the first three months of this year was led by the fastest growth in consumer spending in more than a year.
ItsHot.com Now Offers Distinctive Collections of Custom Jewelry at Wholesale Prices - YAHOO!
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Ahead of the Bell: US Wholesale Prices - Boston Globe
Still, excluding volatile food and gas prices, so-called "core" producer prices are expected to have risen just 0.2 percent. More expensive cars and trucks could push up the core, economists at JPMorgan forecast.
Sainsbury's enjoys jubilee boost - The Guardian
Sainsbury's benefited from an extra 2m visits from shoppers in the week of the Queen's diamond jubilee amid strong demand for party food and bunting.
The UK's third biggest supermarket chain, which operates more than 1,000 stores, said underlying sales rose 1.4% in the 12 weeks to 9 June, which was slower than the 2.6% in the previous quarter but according to the grocer was still stronger than the rest of the market.
Sainsbury's saw 24m customer transactions – about 2m more than normal – in the week of the jubilee and sold 550 miles of bunting, 670,000 union flags and more than 600,000 bottles of champagne and sparkling wine.
It enjoyed its best ever weekly sales of strawberries, with more than 2m punnets sold, 13% greater than the previous record in Wimbledon week last year.
The strong performance will heap more pressure on struggling market leader Tesco, which earlier this week reported a 1.5% fall in underlying sales for a period not including jubilee week.
Chief executive Justin King said: "Customers continued the habit of savvy shopping to save money in order to be able to treat themselves on special occasions, shown by strong sales in the lead-up to the jubilee celebrations."
He added that Sainsbury's was "well placed" to continue to outperform the market.
Shares opened 2% lower on Wednesday as the like-for-like sales figure came in slightly below some City forecasts for growth of up to 2%.
Seymour Pierce stockbrokers kept its forecast for profits this year at £770m, compared with £712m a year earlier, and said the company should see some benefit from sporting events such as the Olympics.
Sainsbury's is likely to have benefited more than most from the jubilee celebrations. It was one of the main sponsors of the Thames diamond jubilee pageant and organised its own jubilee family festival in Hyde Park featuring performances from BBC1's Strictly Come Dancing.
The period also saw its biggest ever week of clothing sales, with the fourth collection of womenswear designed by TV fashion guru Gok Wan set to be the most successful to date.
Its Sainsbury's Local convenience stores enjoyed 16% growth after 21 new shops were opened in the period.
Improvements to its website allowing shoppers to order easily from mobile phones helped drive a 20% rise in online sales.
The group has been one of the strongest performers in the supermarket price war, helped by its brand match scheme, which guarantees to match Asda and Tesco on 14,000 branded goods.
Its own-label ranges have played a key part in recent strong performances and have underpinned its Live Well For Less advertising campaigns.
Sainsbury's is also three-quarters of the way through revamping its By Sainsbury's own-label range, which has included adding new products and improving existing ones.
Wholesale Prices in U.S. Dropped 1% in May on Cheaper Energy - Bloomberg
Wholesale prices in the U.S. dropped in May by the most since July 2009 as costs of energy and food decreased, easing pressure on companies to pass expenses to customers.
The producer price index fell 1 percent, more than forecast, following a 0.2 percent decrease the prior month, Labor Department figures showed today in Washington. Economists projected a 0.6 percent decline, according to the median estimate in a Bloomberg News survey. The core measure, which excludes volatile food and energy prices, climbed 0.2 percent for a second month.
Slower global growth that’s tempering demand for raw materials may allow producers to hold down costs and preserve margins, a benefit to consumers facing weaker income gains. Limited inflation also provides Federal Reserve officials with more room to stimulate the U.S. expansion.
“The signs are that inflation pressures are dissipating fairly quickly,” said Jeremy Lawson, a senior U.S. economist at BNP Paribas in New York. “From a producer perspective, it means import costs are low so they can maintain relatively healthy margins. For consumers, it provides some relief, adds to purchasing power, at a time where their incomes are being constrained by very weak wage growth.”
The median estimate for the producer price index was based on forecasts from 76 economists. Projections ranged from a decrease of 1.5 percent to an increase of 0.3 percent. Core wholesale prices were projected to rise 0.2 percent for a second month.
Retail Sales
Retail sales fell in May for a second month as slower employment and subdued wage gains damped demand, another report today showed. The 0.2 percent decrease followed a similar drop in April that was previously reported as a gain, Commerce Department figures showed today in Washington.
Stock-index futures remained lower after the figures. The contract on the Standard & Poor’s 500 Index expiring in September fell 0.6 percent to 1,312.7 at 8:50 a.m. in New York.
In the 12 months ended May 2012, companies paid 0.7 percent more for materials, the smallest gain since October 2009. The core price index increased 2.7 percent in the same period.
The decline in the overall index was led by a 4.3 percent slump in energy prices that was the biggest since March 2009. The cost of liquefied petroleum fell the most since December 2009, and gasoline prices dropped 8.9 percent, the report showed.
Cheaper Food
The cost of food decreased 0.6 percent, the most this year, reflecting a drop in prices of meat, fruits and soft drinks.
About 25 percent of the increase in core prices in May was attributable to a 0.7 percent gain in the cost of pharmaceutical preparations, the report said.
The price of passenger cars rose 0.2 percent last month and was up 1.2 percent from the prior 12 months.
Prices of capital goods climbed 0.1 percent last month after a 0.2 percent rise in April.
Price pressures eased all the way down the production line, according to today’s data. The cost of intermediate goods dropped 0.8 percent, the most since October. Prices for crude materials, those used at the earliest stage of production, declined 3.2 percent.
The waning of raw material costs is good news for businesses hesitant to raise prices while consumers face an unemployment rate of 8.2 percent. The Thomson Reuters/Jefferies CRB commodity index has fallen 17 percent through yesterday from a five-month high in February.
Raw Materials
Diminished demand for commodities from abroad will probably help keep inflation in check. The expansion in the 17-nation euro region stagnated in the first quarter from the same time in 2011, government data show.
“Raw material costs we do see moderating this year,” said David Meline, chief financial officer of 3M Co. (MMM) The St. Paul, Minnesota-based maker of Post-it Notes and fuel system tune-up kits expects input price inflation of 1 percent to 2 percent in 2012 compared with 4 percent last year, Meline said during a June 5 investor conference.
The outlook for inflation is “subdued,” and price gains will probably remain at or slightly below the 2 percent level that’s in line with central bank policy makers’ goal of stable prices and maximum employment, Fed Chairman Ben S. Bernanke told the Joint Economic Committee of Congress last week. Still-high unemployment and retreating oil and gas prices “should continue to restrain inflationary pressures,” he said.
Fed Meeting
The Federal Open Market Committee, which sets the course of central bank policy, meets next week. The group may address a cooling U.S. expansion, the weakest job growth in a year and a widening financial crisis in Europe.
Producer prices are one of three monthly inflation gauges reported by the Labor Department. The consumer price index, due tomorrow, is projected to drop 0.2 percent in May after little change the prior month, according to the median estimate in the Bloomberg survey. The cost of goods imported into the U.S. fell 1 percent last month, reflecting lower costs for food and fuel, Labor Department data showed yesterday.
To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
Wholesale Prices in U.S. Dropped 1% in May
Daniel Acker/Bloomberg
A forklift driver carries merchandise through the J.C. Whitney distribution center in La Salle, Illinois.
A forklift driver carries merchandise through the J.C. Whitney distribution center in La Salle, Illinois. Photographer: Daniel Acker/Bloomberg
June 13 (Bloomberg) -- Retail sales in the U.S. fell 0.2 percent in May for a second month as slower employment and subdued wage gains damped demand, a sign the world’s largest economy is cooling, Commerce Department figures showed today in Washington. Wholesale prices in the U.S. dropped 1 percent in May, the most since July 2009, following a 0.2 percent decrease the prior month, Labor Department figures showed. Betty Liu, Dominic Chu and Michael McKee report on Bloomberg Television's "In the Loop." (Source: Bloomberg)
Surprising results in survey by shoppers - Portsmouth
The high street is no longer the focus of our shopping experience.
With retail experts like Mary Portas throwing taxpayer’s money at trying to revive our declining town centres, retailers are also having to fight that much harder to keep us coming through their doors.
A recent Consumer’s Association survey has revealed that the squeeze on household budgets is having an impact on shopping habits – with more than half of shoppers saying that they are doing less shopping than this time last year.
But like many contemporary revolutions, it is technology and convenience that’s driving the change in our traditional buying patterns.
ONLINE SHOPPING
Online shopping is increasingly preferred by Consumer Association members, with 41 per cent claiming it’s cheaper and easier to compare prices.
Martyn Hocking, the editor of the Consumer’s Association monthly magazine Which? says that high street shops have to sharpen up their act if they want to retain our loyalty.
‘People are becoming choosier about when and how they purchase products,’ he says.
‘Shops cannot afford to give customers poor service if they want to tempt shoppers away from their computers and back to the high street.’
His comments came after more than 11,000 Which? members took part in an annual shopping survey, rating the high street shops for price, quality, service, product range, and store environment.
LEAGUE TABLES
The 2012 league table of the 100 best and worst shops, revealed some surprising results. Out of 11,274 shoppers surveyed, Lush, a Poole-based national handmade cosmetics and beauty products chain, came out tops.
Lush polled 83 per cent, with department store John Lewis and technology giant Apple just a whisker behind with an 81 per cent approval rating.
There were no surprises in the department store category, with John Lewis rated top department store two years in a row. The top 10 included Marks and Spencer, Harvey Nichols, House of Fraser, Debenhams, and BHS.
At the other end of the scale, there were some significant surprises.
JJB Sports, Poundstretcher, Tesco, Blacks, WH Smith, and Halfords were all in the bottom five stores for price, quality, and service.
BABY AND CHILD
Top baby and child store was Disney, closely followed by Boots and Mothercare.
Toys ‘R Us although having a considerable local presence, came way down the list and was only rated 78th out of 100.
Specialists Mamas and Papas, Early Learning Centre, and the Entertainer, were all middle of table performers, but Argos failed to maintain its second place in this category from last year, slipping from 75 to 67 per cent satisfaction ratings.
CLOTHES, SHOES AND ACCESSORIES
They may not always be stylish, but Clarks were clear winners by a mile for quality shoes. Fat Face, Mamas and Papas, Next, Selfridges and Debenhams were all up there for clothing, but Tesco was rated only 53rd with shoppers giving them the thumbs down for presentation, and poor customer service.
ELECTRICALS
John Lewis, and Apple are the best shops for buying electricals. Hard on their heels were Richer Sounds and the independents.
Apple didn’t fare well on price, but outshone all the others, with lots of working equipment that shoppers can handle and try out for themselves before they buy.
Morrisons was the lowest rated place for buying electricals, scoring just 48 per cent for their product range, service, and staff product knowledge.
Overall some really big names were clearly best avoided if buyers were looking for a positive shopping experience and after-sales service.
On the up, PC World showed a marked improvement from last year, but Comet came out best at 65th in the overall league table. Argos also did well, but Tesco was definitely the one to avoid for all home electrical products.
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Print this pageUS wholesale prices fall by most in nearly 3 years - Yahoo Finance
WASHINGTON (AP) -- A steep drop in gasoline costs drove down a measure of U.S. wholesale prices in May by the most since July 2009. But outside the food and energy categories, prices increased moderately.
The producer price index fell 1 percent in May, after dropping 0.2 percent in April, the Labor Department reported Wednesday. Gasoline prices dropped nearly 9 percent, the most in almost three years. Food costs also fell.
The index measures price changes before they reach the consumer. Excluding food and energy, the so-called "core" index increased 0.2 percent, the same as in April.
In the past 12 months, wholesale prices are up only 0.7 percent, the smallest gain since October 2009. The core index has risen 2.7 percent in the same period. That's the same pace as last month.
Modest wholesale inflation reduces pressure on manufacturers and retailers to raise prices. That helps keep consumer prices stable, which boosts buying power and drives economic growth. Consumer spending makes up 70 percent of economic activity.
Mild inflation also gives the Federal Reserve room to hold interest rates at record-low levels and potentially take other steps to boost the economy.
Gas prices have tumbled 40 cents since peaking on April 6. On Tuesday, the average nationally price for a gallon of gas averaged $3.54, according to AAA. That's down 19 cents from a month earlier.
Higher gas and food prices early last year limited Americans' ability to buy other goods. That caused consumer spending, adjusted for inflation, to fall sharply. As a result, the economy barely grew in the first half of 2011.
The economy has picked up since then but is still growing sluggishly. That is keeping a lid on price increases. Slow growth makes it harder for consumers and businesses to pay higher costs. The economy expanded at just a 1.9 percent annual rate in the January-March quarter.
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