ISTANBUL

US retail sales figures for July show a strong spending start for the third quarter, according to a report by research group organization the Conference Board.

"Nominal retail sales jumped by 0.97 month-over-month in July and real retail sales grew by 0.81 percent, starting third quarter consumption off on a strong note," Dana Peterson, chief economist at the Conference Board, said in the report released Thursday.

Real retail sales, meanwhile, annually grew by 3.2% in July compared to the second quarter of this year, she added.

Peterson said the July gain in retail sales revealed that consumer spending on goods and restaurants was likely strong at the start of the third quarter.

"These data may help arrest fears that the US economy has descended into recession, but more data will be needed especially spending on services, which will be posted on August 30," she added.

The most recent consumer price index (CPI) and retail sales data are supportive of the narrative that the Federal Reserve can probably start cutting interest rates in September, likely by 25 basis points, according to Peterson.

Consumer inflation in the US annually rose 2.9% in July, slowing down from a year-on-year increase of 3% seen in June. On a monthly basis, however, CPI showed an increase of 0.2% in July, accelerating from June when it showed a monthly decline of 0.1%.

Core CPI, which excludes volatile food and energy prices, gained 0.2% in July from the previous month, also slightly gaining pace from the 0.1% increase in June. Annually, core CPI climbed 3.2% in July, the smallest annual increase since April 2021, and decelerating from a 3.3% year-on-year gain seen in June.

The Conference Board expect 75 basis points of rate cuts from the Bed before the end of this year, while it estimates the federal funds rate falling to just above 3% by the end of 2025.