Retail sales decline with lower petrol prices in the US

16 October 2006

The fall in petroleum prices from a high of $78 per barrel to around $60 per barrel last month has hit US retail sales, despite trading in general merchandise rising as pressure on household budgets eased.

According to official data from the US Department of Commerce, overall retail sales, including spending on petrol, fell by nearly half a per cent last September. But excluding petrol purchases they actually rose 0.6 per cent.

In value terms petrol sales fell 9.3 per cent after retail prices dropped by 13 per cent. Despite the month-on-month decline, retail sales were 5.5 per cent higher in September than a year ago.

Consumer spending accounts for two thirds of US GDP and is seen as a crucial barometer of economic health.

According to analysts, the statistics indicate that the US is likely to escape a slide towards recession as was being feared earlier. Analysts actually expect the economy to pick up momentum again by 2007.