The Commerce Department will publish its reguarly monthly reading of retial sales before the market opens Thursday, with investors looking for signs that consumer spending is about to hit an autumn wall, leading to slower inflation and a potenitally dovish Federal Reserve.

Headline retail sales are likely to have risen 0.3% from July levels, to a collective total of around $700 billion, thanks in part to a big jump in gasoline prices that flatter the overall total.

That near 10% gain, which to the average price of a gallon to around $3.954, according to Energy Department data, likely took some steam out of discretionary spending in August, and investors will be watching the control group figures for confirmation.

The closely-tracked control group number, which excludes autos, building materials, office suppliers, gas station sales and tobacco and feeds into the government’s GDP calculations, is expected to rise 0.4% after a big July gain of 1%, fueled in part by Amazon Prime Day, the ‘Barbenheimer’ moive releases and residual spending linked to the enormously-popular Taylor Swift concerts. 

“The bigger picture is that the July jump in consumers’ overall spending likely was a blip (and) a reversion to the previously slowing trend over the next few months is likely, not least because the evidence suggests that the vast majority of people with student loan debt started to make repayments before the official restart of payments on October 1,” said Ian Shepherdson of Pantheon Macroeconomics.

Slowing consumer spending, at least beyond the ineslastic nature of gas prices, could have knock-on effects for both overall U.S. growth and the pace of inflation, which quickened modestly in August to 3.6%.

An easing of core price pressures, however, tied to softening rents and fading demand for new cars, could blunt inflation gains over the coming months, cementing bets that the Fed has completed its rate hike cycle and will next look to lower borrowing costs into the late first half of next year.

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