US Retail Sales Up 0.8% in September, but Gasoline Did the Work

A strong headline with little underneath

American shoppers spent more in September, but mostly because fuel got more expensive. The Census Bureau's advance estimate put retail and food services sales at $745.0 billion for the month. That was 0.8% above August and 6.3% above September 2025.22 Economists had expected about 0.3%, so the number beat forecasts by a wide margin.2326 It came after a revised 1.3% gain in August.25

The detail tells a different story. Without gas station purchases, sales rose only 0.2%.2527 One breakdown found that gas stations supplied $4.07 billion of September's $5.70 billion increase, about 71% of the monthly gain, even though they make up only 9.1% of total sales.28 The "control group" is the slice of retail sales that feeds most directly into GDP, and it rose just 0.1%.29

The coverage agrees on the basic split between a big headline and weak underlying demand. Where reports differ is mostly on how worried to be. The view that holds up best is that September showed price-driven spending, not consumers buying more. Several pieces of evidence point that way: inflation figures, consumer surveys, grocery volumes and the credit data.

Inflation explains the beat

Retail sales are adjusted for the season but not for inflation, so a higher price and a bigger purchase show up the same way.2428 That matters in a month like September. The Consumer Price Index rose 0.6%, and the annual rate climbed to 3.7% from 3.4% in August.31 Gasoline prices jumped 9.1% in the month, which was more than half of the overall increase. Energy prices are up 20.4% over the past year.31

Wholesale prices point the same way. The Producer Price Index rose 1.3% in September and 6.3% from a year earlier. Energy accounted for 80% of a 2.9% jump in goods prices, the largest monthly increase in data going back to 2009.25 CNN tied the energy shock to geopolitical conflict, including the war with Iran.25 One analysis said Americans bought slightly less gasoline than a year earlier while paying 28% more for it. It put AAA's national average at $4.37 a gallon on October 9, up 40% from a year before.28

Adjusted for price changes, the picture gets weaker. Gary Schlossberg of Wells Fargo Investment Institute said retail sales growth over the last three months works out to an annual rate of only 2.4%. He read that as a loss of momentum ahead of the holiday season.25 One estimate puts the year-over-year gain at about 2.9% in volume terms, compared with 6.3% in dollars.28

Grocery prices are cooling, but shoppers are buying less

Groceries stand out. On the price side, the news is fairly good. Food-at-home prices fell 0.1% in September, and the annual rate eased to 1.8% from 2.2% in August.3135 Dairy and beef pulled the index down: milk fell 2.0% in the month and beef 1.0%.3539 The USDA trimmed its 2026 forecast for grocery inflation to 2.4%, though it still expects beef and veal prices to rise 9.4% this year.3638

Slower inflation does not mean lower prices. Grocery prices are still about 32% above January 2020 levels.34 Some staples kept climbing. Rice was 7.1% more expensive than a year earlier, and fruits and vegetables were up 3.7%.39

The more revealing figure is volume. One analysis found grocery store sales up 0.9% in dollars from a year earlier while food-at-home prices rose 1.8%. That implies shoppers bought about 0.8% less, and volumes have been below year-earlier levels for ten straight months.28 The same analysis linked part of the drop to SNAP. It said food-aid participation is at a 17-year low after the 2025 reconciliation law widened work requirements and narrowed eligibility.28 Restaurant sales, meanwhile, grew 7% in dollars and 3.4% in volume.28 Most other coverage did not draw this link, so treat it as one firm's analysis rather than settled fact. The volume decline itself, however, follows directly from the official figures.

Consumer confidence keeps falling

Confidence surveys are even gloomier than the spending data. The University of Michigan's preliminary October sentiment index fell to 46.3 from 48.1, down 13.6% from a year earlier.4347 Its current-conditions gauge dropped from 50.9 to 44.7.44 Survey director Joanne Hsu said buying conditions for durable goods worsened sharply because of high prices and borrowing costs.43 Consumers expect prices to rise 4.7% over the next year, up from 4.6%. Their long-run expectation edged up to 3.5%, the highest level for both since May.43

Other surveys show the same trend. The Conference Board's index fell 6.7 points to 81.9 in September, and its expectations component dropped to 63.6.47 One account called that the lowest reading since April 2014.50 The LSEG/Ipsos index fell to 45.2 in October, its lowest since October 2011 and below its May 2020 pandemic low.45 Executives are gloomy too: the Conference Board's CEO confidence measure fell to 46, the lowest since the second quarter of 2025.48

The reports agree that rising prices, not job fears, are driving the decline. New York Fed data show worries about unemployment and job loss have not worsened much.43 Michigan found the steepest drops among lower-income households and people with smaller stock holdings.44 Holiday plans reflect the caution. Circana found Americans expect to spend $779 on average this season, down from $796, and 74% plan to use savings strategies such as promotions and store brands.43

That sets up the main question. Surveys say consumers are miserable, yet they are still spending. One explanation is that wealthier households are carrying the totals. One analysis found volume growth concentrated in categories dominated by the top 5% of earners, while volumes fell for groceries, furniture and women's clothing.28 Another found shoppers trading down within categories. Sales at value clothing chains rose 8.9% while women's clothing stores fell 9%, as tariffs pushed up clothing prices.28 The personal saving rate fell to 4.1% in August, the lowest since November 2022.2834 Households appear to be keeping spending up by saving less, not because their finances are improving.

Subscription price hikes add up

Recurring digital bills are another cost that shoppers can't easily avoid. Disney raised Disney+ and Hulu prices in September. The ad-free plans rose 13% to $21.49 a month each, the fourth increase in four years.1416 Peacock raised prices on every tier in August, up to $3 a month.11 Apple TV went to $14.99 from $12.99.12 Netflix raised all three plans in March, and its Premium plan now costs $26.99.17 The Hollywood Reporter noted that streaming prices have risen about three times faster than overall inflation since 2022.14

CPI's communication index actually declined in September, so subscription costs were not driving the latest inflation reading.31 Their effect is cumulative instead: several fixed monthly charges, each a few dollars higher, added to a budget already squeezed by fuel. One estimate puts the Disney+ Premium increase at $30 a year and Peacock Premium Plus at $36. Across three or four services, that is roughly the cost of an extra subscription.18 Pricing is also nudging people toward ad-supported tiers and bundles, which Disney has pushed because bundled customers cancel less often.1419

Credit data look calm or alarming, depending on the measure

Consumer credit is where the reporting differs most, and mostly because outlets cite different measures. By the Federal Reserve's bank data, the picture is reassuring. The share of card balances at least 30 days past due fell to 2.85% in the second quarter, the eighth straight quarterly decline, and below the long-run average of 3.69%.1 Charge-offs dropped to 3.82%.6 VantageScore said overall delinquencies held steady year over year in August.2

Other coverage is much more alarming. It cites New York Fed figures showing about 13% of card balances at least 90 days late, the highest share in 16 years.5 Analysts at RIA Advisors argue that measure is inflated by old charged-off debt that lenders now keep reporting for longer.4 They point instead to the share of balances newly becoming seriously delinquent, which was 6.97% and has been roughly flat since 2024.4 That reading is the more credible one. Delinquencies are high but not rising across the board.

The concern is where the stress is concentrated. Among borrowers aged 18 to 29, the rate of balances newly turning seriously delinquent rose to 10.1%. For borrowers 70 and older it reached 6.3%, the highest since 2011.8 Card balances total about $1.26 trillion.8 Those figures fit with the confidence surveys and grocery volumes: the most strain falls on households with the least room to absorb it.

The next data releases

Taken together, the data suggest the US consumer economy is splitting. Wealthier households keep spending, and higher prices inflate the dollar totals. Lower-income and younger households cut back on groceries, put off big purchases and fall behind on cards. September's beat came mostly from the gas pump, not from stronger demand.

Several upcoming reports will test that view. The University of Michigan publishes final October sentiment on October 23, and the Conference Board reports on October 27.47 October retail sales are due November 17.22 With Brent crude cited at $127, fuel will probably push up the dollar total again whether or not people buy more of anything else.28