Retail Sales Surge 3.8 Pct Fueled By Inflation, Increase In Spending

Rising inflation and a post-holiday surge in shopping contributed to an increase in retail spending in January, the U.S. Commerce Department said.

After a slump in December, retail sales surged by 3.8%, which was higher than the 2.1% increase Dow Jones had estimated.

The surge was driven by an increase in online shopping, with eTailers seeing a 14.5% increase in sales. Sales of furniture and home furnishing products increased by 7.2%, while auto part sales went up by 5.7%.

Sales at food and beverage establishments, which are often seen as the bellwether of today’s economy, saw just a 0.9% dip in monthly sales even with the significant spike in inflation, CNBC reported.

“Consumers say they are worried about inflation, but they continue to spend,” said PNC’s chief economist, Gus Faucher.

“Even taking into account the December decline, retail sales in recent months have been increasing much faster than prices, so households are purchasing larger volumes of goods and services, not just paying higher prices.”

Overall, retail sales increased by 13% on a year-over-year basis, driven by a 33% increase in gasoline sales and a nearly 22% increase in apparel sales.

The increase in retail sales comes at a time when the U.S. economy is facing the worst levels of inflation since the 1980s. In response, the government is seeking to hike interest rates to help quell the rising levels of inflation.

Originally published at https://retailbum.com on February 17, 2022.