WASHINGTON—Total retail sales rose by 3.8% in January, following a decline of 2.5% in December and a 0.7% increase in November.
"Retail sales heated back up to a 10-month high in January on a seasonally-adjusted basis," stated NAFCU Chief Economist and Vice President of Research Curt Long. “It is important to note that retail sales are reported on a nominal basis, so some of the gains in recent months simply reflect rapidly rising prices rather than increases in quality or quantity."
The NAFCU analysis noted many sectors were winners in January, the biggest being nonstore retailers (+14.5%), furniture and home fixture stores (+7.2%), as well as motor vehicle and parts dealers (+5.7%). Losses hit several sectors during the month including sales at sporting goods and hobby stores which fell by 3%, followed by gasoline stations (-1.3%) and food services and drinking places (-0.9%), the federal data show.
"Consumer preference for nonstore retails and avoidance of restaurants can likely be explained by Omicron reaching what experts believe is its peak in January," added Long. "This report is yet another data point that supports the Fed's widely expected announcement of liftoff in March. Financial conditions have already tightened in anticipation of that decision, with no evident harm to the real economy."
Year-Over-Year Comparisons
Overall, year-over-year growth in retail sales was up 12.7% during the month, which is down from 16.8% in December. Control group sales – which excludes auto, gas, and building material categories – were up 11.5% from a year ago.
“NAFCU expects the Fed will proceed with an aggressive rate hike campaign through June, which includes a 50-basis point hike in March, before slowing to a more gradual pace of rate increases in the latter half of the year,” concluded Long.