U.S. consumer spending rose in August as gasoline prices fell

The decline in fuel prices continued in August. This eased the pressure on Americans' wallets. Thanks to this, consumers returned to stores last month.

The Census Bureau reported Thursday that a key measure of U.S. retail sales rose in August. The increase was 0.3 percent month-over-month. The figure was down 0.4 percent in July. Year-to-date retail prices excluding inflation rose 9.1%.

Consumer spending at gas stations decreased by 4.2% over the month. Such an impact was caused by the continuing decline in gasoline prices. Setting aside this volatile component, sales rose 0.8% over the past month. Food expenditures rose 0.2% for the month due to persistently high food inflation.

The figure, which indicates a stable consumer condition, may have given the Fed some confidence. The Fed has raised interest rates several times during the year in an attempt to lower the highest inflation rate in four decades.

In all, the Census Bureau tracks 13 categories of retail spending. Eight of them rose in August. Food and beverage retail spending rose 0.5 percent for the month and is up 7.2 percent over the past year. In addition, spending on clothing, building materials and equipment, and sporting goods rose.

A reading of the retail trade report suggests that the decline in fuel prices in August was a mitigating factor for Americans. This raises concerns about the coming winter - then a significant portion of income will have to be spent on home heating. This will be followed by a sharp decline in other spending items. This will happen because consumers today have far less spare cash than they did a year ago, when households had more savings.

One Bankrate official, senior industry analyst Ted Rossman, said that while the usual lifestyle of high-income families has not yet changed, low-income households can only afford necessities. Such attitudes eventually spread to higher-income families.

Ted Rossman said he thinks the spread can be seen now. Household savings are shrinking - credit card debt is rising, soon to approach record levels. Rossman thinks this is having a cumulative effect.