(CNN) — US retail sales surged in January by the most in almost two years, soaring by 3%, the Commerce Department reported Wednesday.
Economists had anticipated sales would rise by 1.8%, after the 1.1% decline in December when consumers pulled back on spending amid high inflation and concern about the direction of the economy.
January was the largest monthly sales bump since March 2021, with increases across all retail categories. Some of the largest jumps were at department stores (17.5%), food services and drinking places (7.2%), and auto dealers (6.4%).
The retail sales data is not adjusted for inflation. In January, the Consumer Price Index showed annual inflation moderating 0.1 percentage point to 6.4%.
On a year-over-year basis, retail sales were up 6.4% from January 2022, when the Omicron variant was surging. Favorable weather, a strong labor market and post-holiday discounting helped contribute to the rebound in sales.
January’s blowout report is likely to underscore the Federal Reserve’s resolve to keep raising interest rates to cool demand as it tries to rein in inflation.
“The economy remains strong, unemployment is low, and that is what is going to keep inflation elevated. The Fed is going to need to raise rates higher — and hold them higher for longer — than people currently expect, and this is going to cause markets to go through some significant volatility as stock and bond markets are priced for benign scenarios and not the more difficult one that we are headed towards,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, in a note Wednesday morning.
Matt Schulz, chief credit analyst for LendingTree, told CNN: “What we’ve seen is a lot of resilience among consumers. Generally, Americans overall have done a pretty good job of managing through some challenging times.”
This story is developing and will be updated.
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