Inflation will remain problematic: Research strategist
U.S. retail sales slumped in December by the most in 10 months, suggesting the fastest inflation in decades is taking a greater toll on consumers just as the nation confronts more coronavirus infections.
The value of overall purchases decreased 1.9 per cent, after a revised 0.2 per cent gain a month earlier, Commerce Department figures showed Friday. The figures aren’t adjusted for inflation, suggesting price-adjusted receipts were even weaker than the headline number.
The median estimate in a Bloomberg survey called for a 0.1 per cent drop in overall retail sales from the prior month.
The year-end slide in retail purchases sets up for a tepid handoff to the first quarter. Combined with the impact from the omicron variant, which is denting outlays for services such as travel and dining out, the figures help explain why economists project household spending to soften.
Furthermore, falling price-adjusted wages, dwindling savings and the end of the government’s pandemic-related financial programs suggest a more moderate pace of spending.
December, at the tail end of the holiday-shopping season, is traditionally a solid month for retail sales. However, concerns about shipping delays prompted many consumers to shop earlier than usual to ensure gifts arrived on time. Because the figures are adjusted for seasonal variations, the earlier shopping may have contributed to the weaker-than-expected figures.
Ten of the 13 retail categories showed declines in receipts last month, led by non-store retailers, which includes e-commerce. Those sales plummeted 8.7 per cent from a month earlier.
Department-store receipts decreased 7 per cent after a 5.5 per cent drop in November. Sales at furniture stores, electronics outlets and sporting goods establishments also fell.
Motor vehicle sales declined 0.4 per cent. Automakers last year struggled to meet demand as production efforts were hampered by shortages of semiconductors are parts. The result was fewer vehicles on dealer lots and limited choices for buyers.
The government’s report showed retail sales excluding gasoline and motor vehicles, slumped 2.5 per cent in December.
So-called control group sales -- which are used to calculate gross domestic product and exclude food services, auto dealers, building materials stores and gasoline stations -- fell 3.1 per cent in December from a month earlier, the most since February.