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Retail Sales Climb as Consumers Get Less Bang for Their Buck

This is a syndicated repost published with the permission of Statista | Infographics. To view original, click here. Opinions herein are not those of the Wall Street Examiner or Lee Adler. Reposting does not imply endorsement. The information presented is for educational or entertainment purposes and is not individual investment advice.

As inflation cooled down slower than expected in January and overall consumer prices rose 0.5 percent compared to the previous month, U.S. consumers showed little signs of frugality. According to preliminary estimates from the U.S. Census Bureau, total retail sales, including spending at stores, online and in restaurants, amounted to $697 billion in January, up 6.4 percent from January ’22 and 3 percent from December, when retail sales had dipped for the second consecutive month.

While a 6.4 percent year-over-year increase in retail sales makes it sound like consumers are bursting with confidence, spending freely, it’s important to note that virtually all of that increase is attributable to higher prices. After all, inflation was also at 6.4 percent in January. Looking at retail sales in constant 1982-84 dollars, retail sales were virtually unchanged compared to January ’22, while climbing 2.4 percent compared to the previous month.

As the following chart shows, much of the latest surge in retail sales can be attributed to rising prices, as consumers are simply getting less bang for their buck. However, even adjusted for inflation, consumer spending looks robust, having yet to decline in face of the latest inflation surge.

This chart shows monthly retail and food services sales in the U.S. since 2010.

Monthly retail sales in the United States

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