August retail sales were stronger than the prior month as consumers spent more on gas amid a surge in oil prices.
Retail sales rose 0.6% in August from the previous month, above Wall Street's estimates for 0.1% growth. Sales excluding auto and gas increased 0.2%, above estimates for a 0.1% decline compiled by Bloomberg. Meanwhile, July's sales were revised down to a 0.5% uptick from a previously reported 0.7% increase.
The August report, released by the Commerce Department, offers a snapshot of consumer spending at a time when economic data has been coming in largely stronger than expected despite the Federal Reserve's interest rate hiking campaign as the central bank seeks to cool inflation.
Nine of the 13 categories highlighted in the release saw increases from a month ago. Sales at gasoline stations led all categories, shooting up 5.7% from July as the price for gasoline ticked higher throughout the month of August. The average price per gallon of gasoline increased from $3.69 on June 26 to $3.93 on August 28, per the US Energy Information Administration.
"The solid increase in headline retail sales in August was not as good as it appears because it was driven by a price-related surge in gasoline station sales while underlying goods and services spending lost momentum and July's gain was revised lower," Oxford Economics lead US economist Michael Pearce wrote in a note on Thursday morning. "Consumption growth is still on track for a strong gain in Q3 overall, but with job and wage growth slowing, student loan repayments restarting, and borrowing conditions still tightening, the headwinds to consumer spending are mounting."
Nonstore retailers, which includes e-commerce, was unchanged from July after Amazon (AMZN) Prime Day and other online sales sparked outsize performance in the category in July.
Meanwhile, sales in sporting goods and hobbies fell 1.6% from July, while miscellaneous stores retailers also dropped 1.3%.
"Seeing some more signs of slowing in August, it now seems that the surge in spending in June and July was related to summer recreation and travel, and is unlikely to persist for much longer," Jefferies US economist Thomas Simons wrote in a note to clients on Thursday.
The August retail sales metric will be the final print before student loan repayments are expected to start weighing on consumer spending. Earlier this week, retailers at the Goldman Sachs Global Retailing Conference were uncertain of the overall economic impact but noted they'd be watching developments closely.
"The student loan repayment is certainly one that we watch," Tractor Supply (TSCO) CFO Kurt Barton said at the conference. "We're aware of it. And anything that takes money out of the wallet certainly is harder for the consumer and takes some of that spend away from the goods and services that they spend on. So I think it's one to be very conscious of."
Correction: A previous version of this story listed the incorrect name of Tractor Supply's CFO. We regret the error.
Josh Schafer is a reporter for Yahoo Finance.