American consumers continued spending aggressively in September despite rising inflation, according to the latest retail sales report from the Census Bureau.
- Retail sales jumped 0.8% to $745 billion, slowing from August’s upwardly revised 1.3% increase but still recording the second-strongest monthly gain since April.
- Economists had expected a much smaller 0.1% increase.
Why it matters: Consumer spending remains remarkably resilient despite higher prices and borrowing costs. Retail sales increased 6.3% from a year earlier, accelerating from August’s 5.6% pace and reaching the third-highest annual growth rate in the past three years.
Even after inflation: September’s Consumer Price Index showed prices rising 3.7% over the past year. Adjusting retail sales growth for that increase suggests inflation-adjusted spending rose approximately 2.5% annually.
- While not an official measure of real retail sales, the calculation suggests consumers are buying more, not simply paying higher prices.
Gasoline leads the charge: Gas station sales surged 6.4% in September, easily the largest monthly increase of any major category. Much of that increase reflected sharply higher gasoline prices rather than greater consumption.
- Gas station sales are now up an extraordinary 28.1% from a year earlier, the strongest annual increase among all retail categories.
Other winners: Department stores posted the second-largest monthly increase at 1.6%, followed by furniture and home furnishings stores at 1.3%. Restaurants and bars also enjoyed a strong month, with sales rising 1.1%.
- Health and personal care stores increased 0.7%, while electronics and appliance stores gained 0.6%.
The annual picture: Beyond gasoline, miscellaneous retailers recorded the second-strongest annual growth at 10.9%, followed by sporting goods, hobby and bookstores at 9.6%. Electronics and appliance stores increased 9.4%, while online and other nonstore retailers climbed 8.2%.
- Restaurants and bars also showed solid growth, with sales up 7.0% from September 2025.
Not everyone is benefiting: Miscellaneous retailers experienced the largest monthly decline, with sales plunging 3.0%. Building material and garden supply stores fell 0.6%, while sporting goods and hobby stores declined 0.5%. General merchandise stores slipped 0.1%, and clothing sales were unchanged.
- On an annual basis, health and personal care stores were the only major category reporting a decline, with sales falling 1.2%.
- Food and beverage stores recorded the weakest positive growth at just 0.9%, followed by motor vehicle and parts dealers at 2.5%.
A closer look: Excluding gasoline stations, retail sales increased just 0.2% in September. Sales excluding both gasoline stations and motor vehicles also rose only 0.2%, suggesting the headline increase was heavily influenced by higher fuel prices rather than broad-based spending growth.
The bottom line: September’s retail sales report shows that American consumers are still spending, even as inflation accelerates. However, much of the monthly strength came from higher gasoline prices, which means the underlying picture is less impressive than the headline suggests. For the Federal Reserve and bond markets, continued consumer resilience could make it harder to bring inflation under control and keep pressure on Treasury yields and mortgage rates.