Consumer spending has so far overcome record-high crude oil prices, which ramped up inflation in October at both the producer and retail levels. The freight tonnage forecast remains on track for a solid year’s end, although the risk of a reversal in consumer spending has ticked up slightly as the all-important holiday shopping season gets underway, according to analyst Chris Brady, president of Commercial Motor Vehicle Consulting (CMVC).

Seasonally adjusted inflation for consumers jumped 0.6% in October-- the largest increase since May, according to the Bureau of Labor Statistics (BLS). Surging energy prices led the index, as it increased 4.2%. Transportation prices followed suit, posting a 2.3% increase. Excluding food and energy, inflation increased 0.2%.

Businesses have been hit even harder, BLS said in a separate report. The producer price index for finished goods soared 1.7%, marking the largest increase in over a year. The energy price index surged 6.8% that month.

Today, crude futures have fallen to the $47 per barrel range— well below the mid-$50 level posted in October. This could mean that October’s inflationary spike could be transitory. But its effects may ripple through retailers’ cash registers through the holiday shopping season, cautioned CMVC’s Brady.

“The recent decrease in crude prices will slow the upwards trend in inflation,” Brady told Fleet Owner. “However, I think the repercussions of October’s crude prices are going to work their way through the economy. There’s definitely a risk coming into winter with home heating oil and energy product consumption increasing. The question is, can consumers continue to sustain their spending on non-energy commodities?”

So far, the answer is yes. Last week the Dept. of Commerce said retail sales in October, excluding motor vehicle and parts sales, grew a robust 0.8%.

See Skies Clearing for Post-Holiday Tonnage Forecast

But the Conference Board said today that the leading indicator fell 0.3% in October, due to sagging real money supply, interest rate spread, and consumer expectations. This marks the fifth consecutive month of decreases.

“While the leading index is not yet signaling a downturn in the economy, the growth rate of the leading index has slowed below the its long-term trend growth rate,” stated the Conference Board.

On the other hand, manufacturing output grew a robust 0.7% in October, underscoring that inventories continue to be lean throughout the supply chain, said CMVC’s Brady. The output of consumer goods increased 0.6%, while the index for durable consumer goods rose a brisk 1.6%. Gains were posted in all major segments, but home electronics and automotive products scored big.

Ultimately, it will be consumers who will determine the freight forecast going into the New Year, explained Brady. And although the retail sales numbers spell out good news for trucking, record-setting energy prices will have a dampening effect on retail sales in the months ahead. This could lead to bloated inventories in the worst-case scenario.

“Once you start seeing these inventories build up in the supply chain, then you see manufacturing start falling off,” Brady said. “The forecast is going to be solid through December. It’s after the holidays when we’ll be able to determine what inventories will be after the holiday sales.”