Sales at retailers rose far more than expected in January as consumers persevered despite rising inflation pressures.
Advance retail sales for the month increased 3%, compared with expectations for a rise of 1.9%, the Commerce Department reported Wednesday. Excluding autos, sales increased 2.3%, according to the report, which is not adjusted for inflation. The ex-autos estimate was for a gain of 0.9%.
Food services and drinking places surged 7.2% to lead all major categories. Motor vehicle and parts dealers increased 5.9%,while furniture and home furnishing stores saw an increase of 4.4%.
Even with a 2.4% increase in gas prices, receipts at service stations were flat. Online retailers saw an increase of 1.3%, while electronics and appliances stores increased 3.5%.
No categories saw a decline, following a December in which sales fell 1.1%.
Markets moved lower following the news, with futures connected to the Dow Jones Industrial Average pointing to a slightly negative open on Wall Street.
On a year-over-year basis, retail sales increased 6.4%, which was exactly in line with the consumer price index move reported Tuesday.
Inflation as gauged by the consumer price index accelerated by 0.5% in the first month of the year, the Labor Department reported Tuesday. The sales report indicates that even with elevated inflation pressures, consumers continued to spend.
The report comes as the Federal Reserve is grappling with rising prices that appear to be abating but are still well ahead of the central bank’s 2% annual target.
Several Fed officials spoke Tuesday, each indicating that while they see some progress being made, there is still more work to do.
“I am confident that the gears of monetary policy will continue to move in a way that will bring inflation down to 2%. We will stay the course until our job is done,” New York Fed President John Williams said.
Markets currently expect the Fed to approve quarter percentage point interest rate hikes at each of their next two meetings,…
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