The surging inflation didn’t make a significant mark on the spending power of Americans as predicted. On the contrary, according to a report by Commerce Department, the retail sales went up in January by 3.8 percent after a 2.5 percent dive in December.
The data shows that the total spending across the nation was $649.8 billion in the first month of 2022. The number was significantly higher than expected, considering that predictions of most economic experts were in the range of 2.1 percent and 2.5 percent.
The sales of cars and demand for auto parts had the most significant contribution to the rise. But even excluding the car industry, the retail sales had a gain of 3.3 percent thanks to online shopping. Moreover, the tendency of Americans to make their purchases on the internet resulted in a healthy 14.5 percent gain for the online selling platforms.
Sectors that saw their sales drop included music shops, book stores, and places that sell sporting goods. Restaurants, bars, and other food and drink establishments also experienced a slower month, seeing 0.9 percent dive in sales.
The positive trend is expected to continue in the following months. The fact that inflation is closing on a 40-year record won’t discourage Americans from spending in the future, according to PNC chief economist Gus Faucher.
“Even taking into account the December decline, retail sales in recent months have been increasing much faster than prices, so households are purchasing larger volumes of goods and services, not just paying higher prices,” Faucher told CNBC.
