People shop at Macy’s department store in Manhattan in New York City, U.S., February 25, 2025. REUTERS/Jeenah Moon

By Lucia Mutikani

WASHINGTON (Reuters) -U.S. retail sales excluding motor vehicles and parts likely posted further gains in September, data from the Chicago Federal Reserve showed on Wednesday, though part of the rise probably reflected higher prices.

The Chicago Fed Advance Retail Trade Summary estimated that retail sales excluding autos and parts increased by a seasonally adjusted 0.5% last month after advancing 0.7% in August.

The moderation in sales likely reflects consumer caution amid higher prices from import tariffs and a slowing labor market that is adding to uncertainty over the economy's outlook.

CARTS is meant to offer an early read for the official monthly retail sales data, excluding automobiles, produced by the Commerce Department's Census Bureau.

The comprehensive retail sales report, scheduled for release on Thursday, has been delayed by the government shutdown, now in its third week.

When adjusted for inflation, retail sales excluding autos are projected to have risen only 0.2% last month after increasing 0.3% in August.

CARTS' projections are broadly in line with most estimates from independent economists and other surveys.

Global fintech and payments company Fiserv's SpendTrend data showed retail sales increased 2.5% year-on-year in September after advancing 3.8% in August. There were large sales gains at electronics and appliance stores as well as general merchandise outlets. But transactions fell at nonstore, health and personal care, furniture and home furnishing retailers.

CONSUMERS HAVE HIGH PRICE FATIGUE

"Consumers are increasingly fatigued by high price levels and navigating an economy that feels less favorable," said Will Auchincloss, Americas retail sector leader at EY-Parthenon. "We expect to see more intentional spending, with households prioritizing value and necessity over discretionary purchases."

Retail sales and consumer spending growth continue to be driven by higher-income households amid robust financial and real estate wealth gains. Their wage growth has remained solid.

Economists say many middle-income consumers are being financially squeezed, though lower-income households are the most impacted by labor market sluggishness, and are bearing the brunt of higher prices from import duties.

That was reinforced by the Federal Reserve's Beige Book report which noted that "spending by higher-income individuals on luxury travel and accommodation was reportedly strong" during the period up to October 6.

It added "several reports highlighted that lower- and middle-income households continued to seek discounts and promotions in the face of rising prices and elevated economic uncertainty."

A Bank of America Institute survey showed spending by the lowest-income households grew 0.6% year-on-year in September. In contrast middle- and higher-income household spending increased 1.6% and 2.6%, respectively.

"Higher-income spending is likely also benefiting from wealth effects," Bank of America Institute said. "The discretionary spending of the top 5% of households by income tends to widen compared to the middle-income cohort when the S&P 500 is rising."

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci)