U.S. retail sales surged in January by the most in seven months, suggesting fresh stimulus checks helped spur a rebound in household demand following a weak fourth quarter.
The value of overall sales increased 5.3% from the prior month after a 1% decline in December, Commerce Department figures showed Wednesday. All major categories showed sharp advances.
Ahead of the report, the median estimate in a Bloomberg survey of economists called for a 1.1% monthly gain in retail sales.
A surge in COVID-19 cases curbed spending at year-end, but since then, virus cases have ebbed and states have started to ease some restrictions on businesses and activity. The ability to shop and eat out, paired with the latest round of $600 stimulus payments, helped drive spending in the month across a variety of categories.
The jump in retail sales, which beat all estimates in Bloomberg’s survey, could further embolden Republican opposition to President Joe Biden’s $1.9 trillion stimulus plan, which many in the GOP say is too big. Even so, Democrats are on track to narrowly pass the package without Republican votes, and the data could also be held up as evidence of how critical relief payments are to the economy and jobs.
Nonstore retailers, which includes online stores, rose 11%, the most in two years. Food services and drinking places rose 6.9% as restrictions eased at restaurants and bars across the country. Furniture stores, and electronics and appliance merchants also saw double-digit gains in the month.
The so-called “control group” subset of sales, which excludes food services, car dealers, building-materials stores and gasoline stations, rose 6%, the largest gain since June.
Gas station receipts rose 4%, which at least in part reflected higher fuel prices. The retail figures aren’t adjusted for price changes, so sales could reflect changes in gasoline costs, sales — or both. At the end of January, the average nationwide price for a gallon of gasoline was $2.42 — roughly in line with pre-pandemic prices.
A separate report from the Labor Department on Wednesday showed producer prices increased 1.3%, the biggest gain in records dating back to 2009, driven by broad-based gains in categories including portfolio management, energy and food.
The core measure, which excludes energy and food, jumped by 1.2% — also the most in records — over the prior month. Meanwhile, a report last week showed the core consumer price index — a key measure of prices paid by U.S. consumers — was unchanged in January for a second straight month, pointing to the pandemic’s lingering restraint on inflation.
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