US retail sales increased less than expected in September, suggesting consumer fatigue amid higher prices because of tariffs, though the moderation did not dampen economists' expectations for solid economic growth in the third quarter.

The sales slowdown reported by the Commerce Department on Tuesday followed a long stretch of gains and marked a weak handoff to the fourth quarter.

Economists said a sluggish labour market, characterised by an unemployment rate at a four-year high, was making consumers more selective about purchases.

That development was reinforced by a survey from the Conference Board showing consumer confidence sagged to a seven-month low in November, with fewer households planning to buy motor vehicles, houses and other big-ticket items over the next six months.

There was also a decline in those who said they were making vacation plans.

Economists say President Donald Trump's sweeping duties on imports have raised prices for everyday commodities, including food.

"While spending has held up over 2025 despite worsening survey readings, many consumers may have reached their limit as rising prices and labour market concerns cut spending plans, at least for the near term," said Ben Ayers, senior economist at Nationwide.

Retail sales rose 0.2 percent after an unrevised 0.6 percent gain in August, the Commerce Department's Census Bureau said.

Economists polled by Reuters had forecast retail sales, which are mostly goods and not adjusted for inflation, would rise 0.4 percent.

On a year-over-year basis, retail sales increased 4.3 percent.

The report, originally due in mid-October, was delayed by the 43-day shutdown of the US government.

Labour market worries pushed down the Conference Board's consumer confidence index to 88.7 this month, the lowest level since April, from 95.5 in October.

Confidence deteriorated in nearly all income groups and across the political spectrum, with the sharpest drop among consumers who identified themselves as independents.

The Conference Board survey also showed that consumers anticipated higher inflation over the next 12 months.

A separate report from BLS on Tuesday showed the Producer Price Index for final demand rebounded 0.3 percent in September, lifted by a 3.5 percent jump in the cost of energy goods and a 1.1 percent increase in food - mostly beef, fresh fruits and grains.

That reading followed a 0.1 percent drop in August. In the 12 months through September, the PPI increased 2.7 percent after advancing by the same margin in August.

The odds of another interest rate cut from the US central bank in December have risen, despite concerns among some Fed officials about inflation.

"Downward progress on inflation remains stalled, but overall this set of price data are not convincing enough to move the Fed doves concerned about downside labour market risks closer to the inflation hawks, leaving the committee split ahead of December's meeting," said Thomas Ryan, North America economist at Capital Economics. (Reuters)