Retail sales rose 0.5% in March, slightly below the expected pace of 0.6% the previous month, and slowed from the previous month's rate of 0.8%. Monthly growth in core retail sales was slightly stronger than expected in March, at 1.1% versus an estimated 1% growth rate, an acceleration from 0.6% a month ago. The retail control group contracted 0.1% month-on-month in March after falling 0.9% in February, weaker than expected 0.2%.

If we look at the sub-items; While sales of motor vehicles decreased by 1.9% compared to the previous month, it confirms the data published in March showing that unit sales of new personal vehicles have decreased. While fuel prices increased overall sales by 8.9%, it seems to be partially offset by the decline in automobile sales. Mall sales and online stores seem to have exhibited an asymmetrical decline, decreasing by 0.3% and 6.4%, respectively. This can be considered as related to the fact that Covid has lost its effect. An increase of 3.3% is observed in electronic products.

The growth rate in retail sales is not adjusted for inflation, it includes nominal increases. Naturally, it is necessary to take into account the effect of inflation, which comes into play in large changes. Consumers' withdrawal of discretionary spending, partly due to high inflation, is also a negative indicator for growth. Therefore, the narrowing seen in the last 2 months in the control group, which is the narrowest indicator that directly affects growth, is thought-provoking. In March, however, the decline has lost some momentum, and there was a further contraction in February.

From the Fed's point of view, there will be no change in the interest rate hike projections, as we evaluate the effects in the growth and inflation equation in terms of signs of how spending has stopped between the slightly increased cost of living.

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