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Retail sales numbers were better than expected in August as price increases across a multitude of sectors offset a considerable drop in gas station receipts, the Census Bureau reported Thursday.

Advance retail sales for the month increased 0.3% from July, better than the Dow Jones estimate for no change. The total is not adjusted for inflation, which rose 0.1% in August, suggesting that spending outpaced price increases.

Inflation as gauged by the consumer price index rose 8.3% over the past year through August, while retail sales increased 9.3%.

However, excluding autos, sales decreased 0.3% for the month, below the estimate for a 0.1% increase. Excluding autos and gas, sales rose 0.3%.

Sales at motor vehicle and parts dealers led all categories, rising 2.8%, helping to offset the 4.2% decline in gas stations, whose receipts tumbled as prices fell sharply. Online sales also decreased 0.7%, while bar and restaurant sales rose 1.1%.

Revisions to the July numbers pointed to further consumer struggles, with the initially reported unchanged but to a decline of 0.4%.

Also, the “control” group that economists use to boil down retail sales, was unchanged from July. The group excludes sales from auto dealers, building materials retailers, gas stations, office supply stores, mobile homes and tobacco stores, and is what the government uses to calculate retail’s share of GDP.

“Higher inflation drove the top line sales figure but volumes are obviously falling because on a real basis, sales are negative,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “Core retail sales being well below expectations will result in a cut to GDP estimates for Q3 as stated.”

Ian Shepherdson, chief economist at Pantheon Macroeconomics, called the release “a mixed report, but we see no cause for alarm.” He said the slump in housing will depress some related sales numbers, but overall spending should up as real incomes rise.

The retail numbers led a busy day for economic data.

Elsewhere, initial jobless claims for the week ended Sept. 10 totaled 213,000, a decrease of 5,000 from the previous week and better than the 225,000 estimate. Import prices in August fell 1%, less than the expected 1.2% decline.

Two manufacturing gauges showed mixed results: The New York Federal Reserve’s Empire State Manufacturing Index for September showed a reading of -1.5, a massive 30-point jump from the previous month. However, the Philadelphia Fed’s gauge came in at -9.9, a big drop from the 6.2 in August and below the expectation for a positive 2.3 reading.

The two Fed readings reflect the percentage of companies reporting expansion versus contraction, suggesting manufacturing was broadly in a pullback for the month.

The reports, however, pointed to some softening in price pressures. For New York, the prices paid and prices received indexes respectively declined 15.9 and 9.1 points, though both remained solidly in growth territory with readings of 39.6 and 23.6. In Philadelphia, prices paid fell nearly 14 points but prices received increased 6.3 points. Those indexes respectively were 29.8 and 29.6, indicating that prices are still rising overall but at a slower pace.

The prices that producers receive for goods and services declined in August, a mild respite from inflation pressures that are threatening to send the U.S. economy into recession.

The producer price index, a gauge of prices received at the wholesale level, fell 0.1%, according to a Bureau of Labor Statistics report Wednesday. Excluding food, energy and trade services, PPI increased 0.2%.

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Economists surveyed by Dow Jones had been expecting headline PPI to decline 0.1%.

On a year-over-year basis, headline PPI increased 8.7%, a substantial pullback from the 9.8% rise in July and the lowest annual gain since August 2021. Core PPI increased 5.6% from a year ago, matching the lowest rate since June 2021.

As has been the case over the summer, the drop in prices came largely from a decline in energy.

The index for final demand energy slid 6% in August, which saw a 12.7% drop in the gasoline index that was responsible for more than three-quarters of the 1.2% decline in prices for final demand goods. That helped feed through to consumer prices, which fell sharply after briefly surpassing $5 a gallon at the pump earlier in the summer.

Wholesale services prices increased 0.4% for the month, indicating a further transition for a Covid pandemic-era economy where goods inflation soared. Final demand services prices rose 0.4% for the month, with the balance of that coming from a 0.8% increase in trade services.

Those numbers come a day after the BLS reported consumer price index data for August that was higher than expected. The two reports differ in that the PPI shows what producers receive for finished goods, while the CPI reflects what consumers pay in the marketplace.

“The PPI report fleshes out the picture on inflation in the US, and makes it look not quite as bad as the August CPI report did,” said Bill Adams, chief economist for Comerica Bank. “Inflation is clearly slowing as gas prices fall. But the process is slow, and inflation looks set to stay well above the Fed’s target for at least a few more quarters.”

The PPI can be a leading indicator for inflation as wholesale prices feed through the economy. However, it’s importance has been tempered over the years as manufactured goods make up less of a share of total spending.

Following the Tuesday report, stocks tanked and expectations surged for Federal Reserve action at its meeting next week. Stock market futures were positive after the PPI report while Treasury yields were higher as well.

Markets were debating between a half percentage point and three-quarter point interest rate increase. After the release, the market fully priced in a three-quarter point move, and there is now a 1-in-3 chance of a full percentage point hike, according to fed funds futures data tracked by the CME Group.

For the better part of a year, the inflation narrative among many economists and policymakers was that it was essentially a food and fuel problem. Once supply chains eased and gas prices abated, the thinking went, that would help lower food costs and in turn ease price pressures across the economy.

August’s consumer price index numbers, however, tested that narrative severely, with broadening increases indicating now that inflation could be more persistent and entrenched than previously thought.

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CPI excluding food and energy prices — so-called core inflation — rose 0.6% for the month, double the Dow Jones estimate, bringing year-over-year cost-of-living increases up 6.3%. Including food and energy, the index rose 0.1% monthly and a robust 8.3% on a 12-month basis.

At least as important, the source of the increase wasn’t gasoline, which tumbled 10.6% for the month. While the summertime decline in energy prices has helped temper headline inflation numbers, it hasn’t been able to squelch fears that inflation will remain a problem for some time.

Rather than fuel, it was food, shelter and medical services that drove costs higher in August, slapping a costly tax on those least able to afford it and raising important questions about where inflation goes from here.

“The core inflation numbers were hot across the board. The breadth of the strong price increases, from new vehicles to medical care services to rent growth, everything was up strongly,” said Mark Zandi, chief economist at Moody’s Analytics. “That was the most disconcerting aspect of the report.”

Indeed, new vehicle prices and medical care services both increased 0.8% for the month. Shelter costs, which include rents and various other housing-related expenses, make up nearly a third of the CPI weighting and climbed 0.7% for the month.

Food costs also have been nettlesome.

The food at home index, a good proxy for grocery prices, has increased 13.5% over the past year, the largest such rise since March 1979. Prices continued their meteoric climb for items such as eggs and bread, further straining household budgets.

For medical care services, the monthly increase of 0.8% is the fastest monthly gain since October 2019. Veterinary costs rose 0.9% on the month and were up 10% over the past year.

“Even things like apparel prices, which often decline, were up a little bit [0.2%]. My view is that with these lower oil prices, they stick and assuming they don’t go back up, that will see a broad moderation of inflation,” Zandi said. “I have not changed my forecast for inflation to get back to [the Federal Reserve’s 2% target] by early 2024, but I’d say I hold that forecast with less conviction.”

On the positive side, prices came down again for things such as airline tickets, coffee and fruit. A survey released earlier this week by the New York Fed showed consumers are growing less fearful about inflation, though they still expect the rate to be 5.7% a year from now. There also are signs that supply chain pressures are easing, which should be at least disinflationary.

But about three-quarters of the CPI remained above 4% in year-over-year inflation, reflecting a longer-term trend that has refuted the idea of “transitory” inflation that the White House and the Fed had been pushing.

And energy prices staying low is no given.

The U.S. and other G-7 nations say they intend to slap price controls on Russian oil exports starting Dec. 5, possibly inviting retaliation that could see late-year price increases.

“Should Moscow cut off all natural gas and oil exports to the European Union, United States and United Kingdom, then it is highly probable that oil prices will retest the highs set in June and cause the average price of regular gas to move well back above the current $3.70 per gallon,” said Joseph Brusuelas, chief economist at RSM.

Brusuelas added that even with housing in a slump and possible recession, he thinks price drops there probably won’t feed through, as housing has “a good year or so to go before the data in that critical ecosystem improves.”

With so much inflation still in the pipeline, the big economic question is how far the Fed will go with interest rate increases. Markets are betting the central bank raises benchmark rates by at least 0.75 percentage point next week, which would take the fed funds rate to its highest level since early 2007.

“Two percent represents price stability. It’s their goal. But how do they get there without breaking something,” said Quincy Krosby, chief equity strategist at LPL Financial. “The Fed isn’t finished. The path to 2% is going to be difficult. Overall, we should start to see inflation continue to inch lower. But at what point do they stop?”