Retail sales December 2021:

Retail sales fell much more than expected in December as soaring prices weighed heavily on spending, the Commerce Department reported on Friday.

The monthly sales report anticipated to end the year showed a decline of 1.9%, much worse than the Dow Jones estimate for a drop of just 0.1%.

Excluding autos, sales fell 2.3%, also well below expectations of a 0.3% rise.

In addition to weak December numbers, November’s gain was revised down to 0.2% from the 0.3% increase initially reported.

Considering that the sales figures are not adjusted for inflation, the data points to a slow end to what had otherwise been a strong 2021 in which sales increased by 16.9% compared to 2020 marked by the pandemic.

The consumer price index rose 0.5% for the month, taking the year-over-year gain to 7%, the highest since June 1982. Wholesale prices also rose, climbing 9.7% over the 12-month period for the largest increase in the calendar year. since the data was kept until 2010.

Online spending was the hardest hit as a share of overall spending, with non-store retailers reporting an 8.7% drop for the month. Sales of furniture and home furnishings were down 5.5% and sporting goods, music and book stores were down 4.3%.

The surge in omicron cases caused damage across the board as consumer activity declined.

Restaurants and bars, which posted a 41.3% annual gain in 2021 to lead all categories, saw a 0.8% decline for the month. Gas stations followed closely for the year, with a 41% increase in sales, but saw a 0.7% decline in December due to lower fuel costs. Gasoline prices fell 0.5% to end a year in which sump prices rose 49.6%.

Only two categories saw increases during the month: miscellaneous retail stores, which rose 1.8%, and building materials and garden centres, which posted a gain of 0.9%.

A separate Labor Department report on Friday showed import prices fell 0.2% for the month, against expectations of a 0.2% increase, the first negative figure since August and due in largely to a 6.5% drop in oil prices.

The figure raised hopes that the inflationary spurt may subside, although much of the movement stems from lower oil prices.

In recent days, Federal Reserve officials have stressed the importance of fighting inflation, with several policymakers saying they expect to start raising interest rates as early as March. The Biden administration has joined central bank leaders in blaming much of the price hike on pandemic-specific factors, such as huge demand for goods relative to services and supply chain issues. .

The price spike, however, came on the heels of unprecedented levels of liquidity injections into the economy from both fiscal and monetary policy.