ARLINGTON, Va.—Total retail sales increased 2.9% in January after falling 1.1% in December, another factor contributing to the good news/bad news scenario for the Federal Reserve, which is likely to consider pushing up rates longer than many had anticipated.
“In conjunction with recent economic data indicating robust employment and wage growth, the strong January spending data looks sustainable,” said NAFCU Economist Noah Yosif, citing Commerce Department data.
Growth was widespread across sectors but was led by sporting goods, hobby, musical instrument, and bookstores with 6.9%. Clothing accessory stories grew 6.6% trailed by gasoline stations which grew 5.1%.
Year-over-year growth in retail sales was up 7% in January. Control group sales – which excludes auto, gas, and building material categories – were up 9% from a year ago.
‘Inflationary Impulses’
Yosif noted that although retail sales signaled resilience in consumer spending, it was also the latest indicator to “suggest inflationary impulses remains persistent, increasing the likelihood of an extended, and potentially more aggressive, tightening cycle by the Federal Reserve.”
In addition to the strong sales figures, the January jobs report that showed more than a half-million jobs were created, further bolstering forecasts the rate increases will continue as part of the broad effort to slow inflation.
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