Consumers lift spending to pay for pricier gasoline

WASHINGTON, Fri Sep 28, 2012 – Consumer spending rose in August by the most in six months as households stretched to pay for higher gasoline prices, according to a government report on Friday that pointed to lackluster economic growth in the third quarter.

The Commerce Department said consumer spending increased 0.5 percent after an unrevised 0.4 percent gain in July. When adjusted for inflation, spending edged up 0.1 percent after increasing 0.4 percent in July.

Consumer spending accounts for about 70 percent of U.S. economic activity and the second straight monthly increase mostly reflected higher gasoline prices, which rose 28.2 cents per gallon last month, though automobile purchases also helped.

“With other sectors of the economy slowing down, relying on consumers is not the exact position we want to be in right now when incomes are slowing sharply,” said Jacob Oubina, senior U.S. economist at RBC Capital Markets in New York.

The U.S. dollar fell slightly against the euro and the yen after the data. Major U.S. stock index futures edged lower in early trading, while the 30-year Treasury bond price rose.

Spending on nondurable goods jumped 1.7 percent in August after increasing 0.8 percent the previous month. Household spending on services rose a modest 0.2 percent compared to 0.3 percent in July.

With the inflation adjusted spending barely rising last month, growth in real consumer spending is unlikely to improve much this quarter from the tepid 1.5 percent annual pace recorded in the April-June period.

Slower consumer spending and a drop in farm inventories due to a severe drought in the Midwest held gross domestic product growth to a 1.3 percent pace in the second quarter, a step down from 2 percent in the first three months of the year.

Gasoline, autos boost retail sales in August

WASHINGTON, Fri Sep 14, 2012 – Retail sales rose for a second straight month in August, boosted by automobiles and high gasoline prices, but the underlying tone pointed to modest economic growth in the third quarter.

Retail sales increased 0.9 percent, the largest increase since February, the Commerce Department said on Friday, after a downwardly revised 0.6 percent rise in July that was previously reported as a 0.8 percent advance.

While the gain last month was above economists’ expectations for a 0.7 percent rise, details of the report pointed to an only modest increase in consumer spending this quarter after sluggish demand restricted the economy to a 1.7 percent annual growth pace in the April-June period.

That suggests third-quarter economic growth would still be insufficient to cut into high unemployment, which on Thursday prompted the Federal Reserve to launch a third round of bond purchases and push its pledge to hold interest rates near zero through at least mid-2015 from late 2014.

The rise in sales last month was led by gasoline stations, reflecting a 28 cents per gallon increase in the pump price. Gasoline sales surged 5.5 percent, the largest increase since November 2009, after rising 0.4 percent in July.

Automobile sales increased 1.3 percent, the most since February, after gaining 0.1 percent in July.

Excluding gasoline and autos, retail sales edged up 0.1 percent after rising 0.8 percent the prior month.

Walmart gives cardholders gas discount through Dec. 24

BENTONVILLE, Ark., Wed Aug 29, 2012 – Walmart will soon cut gasoline prices by up to 15 cents per gallon for drivers in 20 U.S. states who pay with its cards in a bid to appeal to loyal shoppers hit by big price increases at the pump.

Patrons paying with a Walmart MoneyCard or Walmart credit card will save 15 cents per gallon from Aug. 31 through Dec. 24, while others who use a Walmart gift card will get 10 cents off, `Wal-Mart Stores Inc said on Wednesday.

The promotion comes as Wal-Mart, the world’s largest retailer, tries to attract shoppers heading into the holiday season. Last week, Walmart said it would bring back layaway a month early, giving U.S. shoppers under economic pressure more time to pay for holiday gifts.

The latest “gas rollback,” at more than 1,000 gas stations, follows a similar 2011 program that ran for a longer period of time.

Last year’s promotion ran from June 29 through Christmas Eve.

Gasoline prices are not at record highs but have been rising in recent months and jumped this week as Hurricane Isaac threatened to batter the U.S. oil refining belt. Any significant damage to refineries or extended outages could push gas prices higher.

After Hurricane Katrina, a Category 3 storm, battered the Gulf coast in 2005, U.S. gas prices jumped more than 45 cents in a single week.

The average price for regular gasoline was $3.80 on Wednesday morning, up from nearly $3.49 a month ago and $3.61 a year earlier, according to AAA data. In July 2008, the average price hit an all-time high of $4.11.

Walmart is not alone in trying to woo shoppers with lower-priced gasoline.

Grocery chain Kroger Co. often offers gasoline discounts to loyal patrons. Warehouse clubs Costco Wholesale Corp, Wal-Mart’s Sam’s Club and BJ’s Wholesale Club monitor prices at nearby stations and try to match or undercut them to lure drivers.

Walmart’s 2011 “gas rollback” plan offered 10 cents off per gallon for patrons using a Walmart gift, money or credit card at participating gas stations. The offer was originally set to run through September, then extended through Dec. 24.

April consumer prices flat as gasoline, natural gas drops

WASHINGTON, Tue May 15, 2012 – Consumer prices were flat in April as households paid less for gasoline and natural gas, possibly giving the U.S. Federal Reserve more room to help economic growth should the recovery stumble.

The Labor Department said on Tuesday its Consumer Price Index was unchanged last month after rising 0.3 percent in March. April’s increase was in line with economists’ expectations.

Outside the volatile food and energy category, inflation pressures also appeared to be modest. Core CPI edged up 0.2 percent, matching the increase posted in March.

A number of officials at the Fed appear loath to take further action to help the economy, with some arguing the central bank needs to get ready to start removing monetary stimulus.

A separate measure of inflation targeted by the Fed, and which is not included in Tuesday’s report, continues to hover around the central bank’s 2 percent goal.

The Fed has maintained since January that it expects economic conditions to warrant holding interest rates near zero through at least late 2014.

Last month, the CPI index was held back by a 2.6 percent fall in gasoline prices. Natural gas prices dropped 1.8 percent. Prices also fell for fuel oil.

Food prices climbed 0.2 percent last month.

Overall consumer prices rose 2.3 percent year-on-year, down from a reading of 2.7 percent in March. In the 12 months to March, core CPI increased 2.3 percent, the same pace clocked in March.

Rising gasoline prices have helped keep the overall inflation hotter than core inflation in recent years. April was the first month since October 2009 that headline 12-month reading did not exceed the measure of core inflation.

December producer prices fall 0.1 percent, DOL report says

WASHINGTON ― Producer prices fell in December as companies paid less for gasoline and vegetables, although higher prices for light motor trucks pushed a measure of underlying inflation higher.

The Labor Department said on Wednesday its seasonally adjusted index for prices received by farms, factories and refineries fell 0.1 percent.

Economists polled by Reuters had expected wholesale prices to increase 0.1 percent.

Excluding volatile food and energy, core producer prices rose 0.3 percent last month, the biggest rise since July. That was above economists’ expectations for a 0.1 percent gain.

The data appears to send mixed messages about inflation pressures in the U.S. economy.

A drop in energy prices has encouraged Wall Street and the U.S. Federal Reserve to forecast inflation will cool in coming months. Energy costs for businesses fell 0.8 percent last month, with gasoline down 2.3 percent. Food prices fell 0.8 percent.

At the same time, higher core prices – if eventually passed on to consumers by businesses – might make the U.S. central bank more cautious about taking additional steps to help the still-struggling U.S. economy.

That said, about 30 percent of the gain in core prices were due to an increase in prices for light motor trucks, the Labor Department said.

Prices in auto sector have been affected in recent months by floods in Thailand that last year disrupted supply chains. Prices for light trucks rose 0.9 percent last month, the biggest rise since July.

Gasoline boosts producer prices, seen as temporary

WASHINGTON ― Producer prices rose at their fastest pace in five months in September as the cost of gasoline surged, but a small gain in core prices suggested the increased price pressure was unlikely to be sustained.

The Labor Department said on Tuesday its seasonally adjusted index for prices received by farms, factories and refineries, increased 0.8 percent after being flat in August. Economists had expected prices to increase 0.2 percent.

Stripping out volatile food and energy, wholesale prices rose 0.2 percent after inching up 0.1 percent in August.

“Slower growth abroad suggests further moderation in demand for raw materials heading into the fourth quarter, which will likely translate into inflation moderation,” said Lindsey Piegza, an economist at FTN Financial in New York.

Prices for U.S. government debt trimmed gains on the data.

The dollar briefly pared gains against the euro, while stocks on Wall Street were lower as investors focused on Moody’s warning on France’s credit rating and slow growth in China.

Gasoline prices jumped 4.2 percent, the largest gain since March, after dropping 1 percent in August.

Economists, however, dismissed the spike in gasoline, saying it was attributed to how the data was adjusted to try to smooth seasonal volatility.

“It probably did not point to a new trend to higher inflation,” said Gary Thayer, chief macro strategist at Wells Fargo Advisors in St. Louis, Mo.

But some said there was a risk that data on Wednesday could show an upside surprise in September consumer prices.

The consumer price index likely rose 0.3 percent last month, according to a Reuters survey, after increasing 0.4 percent in August.

The strong rise in wholesale prices last month is unlikely to spark a broad increase in inflation pressures given the weak economic environment.

It will probably have little impact on the Federal Reserve, which focuses on core consumer inflation, as it weighs further options to help the anemic recovery and pull down an unemployment rate stuck above 9 percent.

Pressure on the U.S. central bank for further monetary stimulus has lessened in recent weeks as retail sales and the trade balance data suggested economic growth accelerated in the third quarter after the second quarter’s tepid 1.3 percent annual rate.

Economists estimate gross domestic product grew at an annual pace of anywhere between 2.3 percent and 2.7 percent in the third quarter.

The economy’s improving tone is starting to filter through to the ailing housing market. Home-builder sentiment rose this month to its highest level in nearly 1½ years  , the National Association of Home Builders said in a separate report.

The NAHB/Wells Fargo Housing Market index rose to 18, the highest level since May 2010, from 14 in September. Economists had expected the index to only rise to 15.

Still it remained below 50, meaning more builders view market conditions as poor.

Last month, food prices rose 0.6 percent, slowing from a 1.1 percent rise in August.

In the 12 months to September, producer prices increased 6.9 percent, accelerating from August’s 6.5 percent advance.

Wholesale prices outside of food and fuel were bumped up by a 0.6 percent rise in light motor trucks — accounting for a third of the rise in the core PPI measure. Light trucks had risen 0.1 percent in August.

Passenger car prices fell 0.5 percent after slipping 0.4 percent in August. Disruptions to production wrought by the March earthquake in Japan caused car prices to spike early this year.

In the 12 months to September, core producer prices rose 2.5 percent after increasing by a similar margin the prior month. The rise was above economists’ expectations for a 2.4 percent advance.

Gasoline boosts producer prices, seen temporary