U.S. Retail Sales Rise in October, Fuel Debate Over Federal Reserve's Rate Decision

U.S. retail sales slightly exceeded expectations in October due to increased purchases of motor vehicles and electronics, sparking discussions about the Federal Reserve's interest rate policy. While consumer spending appears strong, concerns arise over potential inflation and reliance on high-income consumers as primary growth drivers.

U.S. retail sales grew more than anticipated in October as consumers increased spending on cars and electronic goods, signaling robust economic performance at the start of the fourth quarter. This positive sales report, coupled with upward revisions for September's data, has influenced traders' expectations regarding future Federal Reserve interest rate cuts.

Retail sales rose by 0.4% last month, surpassing economists' predictions of a 0.3% increase. Key sectors, such as auto dealerships and electronics stores, showed significant gains. However, sales in other areas, including clothing and furniture outlets, experienced declines. The strong consumer spending is attributed to low unemployment and healthy household balance sheets.

Despite the strong consumer spending, questions remain about the sustainability of growth, particularly as it seems driven by wealthier households. Meanwhile, financial markets have adjusted the probabilities of further rate cuts by the Federal Reserve, amid discussions about inflationary pressures and economic expansion.

(With inputs from agencies.)