The term core retail sales imply to an economic indicator that tracks the month-to-month decrease or increase in United States consumer spending in most retail categories. As Kavan Choksi points out, retail sales and core retail sales are the two monthly retail sales numbers that tend to be most commonly reported by the financial news media. Core retail sales refer to all consumer spending apart from certain exclusions. It excludes automobiles, gasoline, building materials, and food services. Prices of such products are usually more volatile and can skew the overall number. On the other hand, broader retail sales reflect the monthly estimate of all consumer spending.
Kavan Choksi provides a general understanding of core retail sales
The Census Bureau of the United States is responsible for complying the retail sales number. It is reported as a monthly and year-over-year (YOY) increase or decrease in spending. Core retail sales and retail sales together provide investors and economists with a sense of direction of the United States economy. Consumer spending tends to account for more than two-thirds of the United States economy. Hence, core retail sales number is a very important indicator of the health of the overall economy.
The retail sales number is based on a comprehensive report that is released every month by the Census Bureau. The Census Bureau is a division of the U.S. Department of Commerce. Retail sales data is released in the middle of every month for the preceding month. Economists and investors across the nation keep an eye on these numbers to determine whether retail sales are going up or going down, and by how much. Diverse government bureaus in the United States also use this data. The numbers tend to go into the calculation of the gross domestic product (GDP). They are also used for developing consumer price indexes and can help in analysing current economic activity. The Federal Reserve additionally makes use of retails sales numbers for the purpose of assessing recent trends in consumer purchases. The percentage increase or decrease from month to month offers a good indication of if the economy is expanding or contracting, and at what rate. Very weak or very strong retail sales might put downward or upward pressure on prices.
As per Kavan Choksi, when retail sales go up, eventually upward pressure on prices might take hold. This is particularly true if the numbers continue to rise each month. However, the opposite will be true in case the sales plummet for a prolonged period of time. Prices are slashed as consumers spend less.
The Monthly Trade Report of the U.S. Census Bureau is where the monthly retail sales data are collected and compiled. This data measures the total retail spending across the United States. The monthly rate of change tends to be expressed as a negative or positive percentage. This data covers sales for both durable and non-durable goods at the retail level. Core retail sales are a segment of this broader monthly retail sales number without factoring in food, energy, and other fluctuating categories.