Sales are up 1.2 percent, partly due to inflation

TEXT OF INTERVIEW

JEREMY HOBSON: Now to those retail sales. Let’s bring in Julia Coronado chief economist at the investment bank BNP Paribas. She joins us now live from London. Good morning.

JULIA CORONADO: Good morning.

HOBSON: So Julia — sales up by 1.2 percent. It’s the biggest rise since March — is retail back?

CORONADO: I would caution taking too much optimism from the number. Part of it is inflation, so gas prices rose quite a bit, pushing up the numbers. Now consumers did spend on cars, and that’s a good sign, but they also pulled back on spending on electronics and department stores. So overall it’s still a mixed picture and I’d say consumers are still pretty cautious on how they allocate those dollars.

HOBSON: OK we got earnings this morning from the big home improvement chain, Lowes. They missed expectations and they say the reason why is because people are putting off big home renovations that are very expensive. Put that into context of the retail sales this morning.

CORONADO: Well that really does highlight the trends that we’ve been seeing in retail sales, which is that consumers are willing to spend on smaller ticket items like clothing and restaurant meals, but they really shied away and have been very conservative about spending on autos or renovation projects and the kinds of items that usually require a deeper sense of optimism about the future. So I’d say consumers are still pretty cautious and retailers are feeling it.

HOBSON: Julia Coronado, chief economist at the investment bank BNP Paribas, thanks as always for your time.

CORONADO: It’s my pleasure.