The mood of consumers has risen to an eight-month high this month, and the performance of retail exchange traded funds (ETFs) are reflecting the lighter mood.

The jump in the confidence index was unexpected, and it was the biggest monthly jump since January 2004, reports Steven C. Johnson for Reuters. No doubt, it was the lower gas prices and lower one-year inflation expectations that led to the lightened moods. The one-year inflation is now expected to be 3.6%, down from 4.8% last month.

Wholesale inflation unexpectedly plunged in August by the largest amount in two years, while retail sales remained flat, reports Martin Crutsinger for the Associated Press. Economists expected a decline in wholesale prices of 0.5%, but they fell instead by 0.9%, mostly on falling energy prices.

The retail numbers still show that consumers are cutting back on spending, and it’s contributing to the gloomy mood on Wall Street this morning.

While retail ETFs are down in trading today, several of them have been performing well over the last month:

• SPDR S&P Retail (XRT): up 1% year-to-date; up 7% in the last month
• Retail HOLDRs (RTH): up 7.3% year-to-date; up 4.3% in the last month
• Consumer Staples Select Sector SPDR (XLP): up 1.3% year-to-date; up 1.1% in the last month
• iShares Dow Jones U.S. Consumer Goods (IYK): down 4.4% year-to-date; up 0.7% in the last month

For full disclosure, some of Tom Lydon’s clients own shares of XLP.

Tags: IYK, Retail, RTH, Sector ETFs, XLP, XRT