Retail sales fall 0.8%, the lowest monthly figure since March 2023

DORAL, FL – Retail sales fell 0.8% in January following the December strong season as far as spending goes when they rose a revised 0.4%.

According to experts, the decline is considered the lowest monthly figure seen since March of last year. Excluding sales at auto dealerships and gas stations, sales were down 0.5% as per a new Commerce Department’s report released on Thursday.

The so-called control group of sales, reported the AP, referring to a term used to calculate economic growth, fell 0.4% in the last month, which excludes sales of autos, gas, building materials, and restaurant meals. Economists thought this number would be higher. 

However, the report may indicate that the Federal Reserve could be in the track of cutting rates, resulting in a better chance for shoppers and businesses to seek lower rates for borrowing.

“Real consumption appears to have declined in January and even allowing for a recovery over February and March, growth will slow sharply in the first quarter,” wrote Andrew Hunter, deputy chief U.S. economist at Capital Economics, in a report, the AP indicated. “The upshot is that Fed officials may not need to worry much longer about the possibility of continued economic resilience reigniting inflation.”

Retail sales, despite the report, haven’t declined at the same pace in all categories. In fact, consumer spending was reduced in nine of 13 categories. 

Business at clothing and accessory stores was down 0.2%, while sales at health and personal care stores fell 1.1%; sales at building materials and garden suppliers fell 4.1%, and business at general merchandise stores remained the same. Online sales, on the other hand, fell 0.8%. In addition, the restaurants industry is growing strong as spending has not declined. 

It should be noted the report is limited due to the fact that it doesn’t include many services, such as health care, travel and hotel lodging.

This is scenario is happening while U.S. consumer inflation “cooled last month yet remained high”, and this week consumer price index rose 0.3% from December to January. Compared with a year ago, prices are up 3.1%.

“That’s far below the 9.1% inflation peak in mid-2022, but solidly above the Federal Reserve’s 2% target level at a time when public frustration with inflation has become a pivotal issue in President Joe Biden’s bid for re-election,” the news report notes. 

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