The news: US inflation continued to ease in February, due mainly to falling energy prices.
The good: There are signs that the Fed’s much-hoped-for “soft landing” could be in sight.
The not-so-good: Other indicators point to inflation remaining stubbornly high, adding to the pressures faced by consumers and raising the possibility of more aggressive action from the Fed.
Core inflation has ticked up in recent months.
Real wages—and consumer buying power—are falling.
Wholesale used car prices trended upward in February.
The big takeaway: While consumer spending has stayed relatively resilient despite inflationary pressures and economic uncertainty, the relatively strong inflation report coupled with Silicon Valley Bank’s collapse and the ensuing fallout could drive households to be even more cautious with their spending.
That in turn could compound the difficulties many retailers are already facing, as shoppers cut back on discretionary purchases and trade down to cheaper products (or competitors) to stretch their budgets further.
This article originally appeared in Insider Intelligence's Retail & Ecommerce Briefing—a daily recap of top stories reshaping the retail industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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