US retail sales rose in January by the most in nearly two years, signalling robust consumer demand that could bolster the Federal Reserve’s resolve to keep raising interest rates in the face of persistent inflation.
The value of overall retail purchases increased 3 per cent in a broad advance – the most since March 2021 – after a 1.1 per cent drop in the prior month, Commerce Department data showed Wednesday. Excluding gasoline and cars, retail sales rose 2.6 per cent, also the biggest increase in nearly two years. The figures aren’t adjusted for inflation.
The total retail sales figure matched the highest estimate in a Bloomberg survey of economists, which had a median forecast of 2 per cent.
All 13 retail categories rose last month, led by motor vehicles, furniture and restaurants. The report showed vehicle sales climbed 5.9 per cent in January, also the most in nearly two years. The value of sales at petrol stations were essentially unchanged.
The report showed US consumers got off to a good start in 2023, rebounding from a spending slowdown at the end of last year. A resilient labour market marked by historically low unemployment and solid wage gains has allowed many Americans to keep spending on goods and services even as borrowing costs rise and inflation remains elevated.
The data follows a report on Tuesday that showed US consumer prices rose briskly at the start of the year – including in many goods categories such as clothing and household furnishings – prompting several Fed officials to suggest that interest rates may need to go even higher than expected to quash persistent inflationary pressures. – Bloomberg
