Retail sales fell 1.9 percent in December, the Commerce Department reported Friday, following a slowdown during an otherwise robust holiday shopping season that started for many consumers earlier this year.
It was the first decline in four consecutive months of sales gains, although the November gains slowed from October due to the extended holiday shopping season fueled by fears of product shortages and price hikes. Total sales for October through December were 17.1 percent higher than the same period a year earlier, according to the report.
Beth Ann Bovino, chief US economist at S&P Global, said that while there would certainly be a “headline shock” over a weaker number, the broader picture for retail has been strong in recent months.
“This is not a sign of consumer weakness,” she said. “Given that households have relatively strong balance sheets with high savings levels and a strong labor market with rising wages, it appears that consumers are not necessarily closing their wallets. They are taking a short break.”
The retail sales report provides a data point on consumer mindsets after a report this week showed inflation had soared to its highest level in 40 years by the end of 2021. Prices have risen as new strains of the coronavirus have exacerbated supply chain problems and strong consumer demand for goods.
Economists at Morgan Stanley had forecast retail sales to rise 0.4 percent in December. While inflation surpassed the coronavirus as the No. 1 concern for consumers it surveyed in November, it was “without a dent in spending plans,” they said in a note last week.