The outlook for Federal Reserve policy has raised concerns for consumer companies, leading to a decline in their performance. The Commerce Department reported a seasonally adjusted 0.7% increase in retail sales, indicating a rise in spending at stores, online, and in restaurants. However, this unexpectedly robust growth rate has spurred worries about inflation since the data is not adjusted for price changes.

Inflation Concerns Debated

Despite the worries expressed by some regarding inflation, one strategist believes that these concerns may be overblown. Nigel Green, the chief executive of deVere Group, argues that there is unlikely to be a wage price spiral due to the downward trend of real wages. He also notes that employers are currently hesitant about increasing salaries upon demand, which could help control wage inflation.

Home Builders' Confidence Index Decreases

The housing market also faces challenges, as indicated by the National Association of Home Builders' monthly confidence index. In August, the index fell 6 points to a reading of 50. This decline amplifies concerns that rising mortgage rates are discouraging potential buyers.

Home Depot's Sales Reflect Impact of Rising Rates

The impact of rising rates is evident in the performance of home-improvement giant Home Depot. The company reported a 2% slip in comparable sales for the three-month period ended July 30, compared to the same period a year earlier. This decline marks the third consecutive quarter of year-on-year sales decreases for Home Depot.

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