October retail sales numbers suggest strong demand for plastic materials and plastic products against a backdrop of stable prices.

Retail sales in October rose 0.2 percent from September and 4.6 percent from October of 2016, according to the latest report from the Bureau of Labor Statistics (BLS). Leading the monthly increase in retail sales were sporting goods, hobby, book and music stores increasing 1.5 percent, which could be due mainly to “back-to-school” household spending. But retail sales in most categories tracked by the U.S. Census showed an increase in October. Year over year, retail sales in building materials and garden equipment and supplies registered the largest increase at 8.8 percent, followed by sales at gasoline stations (7.5 percent) and non-store retailers’ sales (6.8 percent). Since January, monthly retail sales have stayed above $472 billion—averaging $474.5 billion. Last year, monthly retail sales averaged $459 billion.  

Consumer prices, or what’s referred to as headline inflation, in October were stable, rising by a meager 0.1 percent on a seasonally adjusted basis for all items. Core inflation, which excludes the volatile food and energy prices, inched up moderately by 0.2 percent. From October last year, headline and core inflation rates rose 2.0 percent and 1.8 percent, respectively.

The producers price index (PPI) for final demand, which measures price change from the seller’s perspective, also increased in October—a 0.4 percent increase on a seasonally adjusted basis, according to the BLS. On a 12-month basis, PPI final demand was up 2.8 percent.

The index for final demand services rose 0.5 percent in October due to an increase in margins for fuels and lubricants retailing. The index for machinery and equipment wholesaling also increased. Prices for final demand goods increased 0.3 percent in October for the third consecutive month. Almost half of the increase resulted from higher prices in pharmaceutical preparations, but the index for industrial chemicals also increased. The October PPI increase was the largest since February 2012.

With the U.S. economy no longer beset by an output gap—the difference between actual and potential output measured broadly in terms of gross domestic product—it is likely that changes in the PPI moving forward will be higher, which will also affect changes in the Consumer Price Index (CPI). In the near term, however, from the lens of the household sector, stable prices fit nicely in the ongoing uptick in consumer spending, complementing the positive demand for goods and services that both directly and indirectly generates sales in plastics materials, packaging and products.