Amid Inflation, Retail Sales Rise 3.8% In January

Despite continuing Omicron concerns, retail sales last month rose to 3.8% — a total of $649.8 billion — the U.S. Department of Commerce reported Wednesday morning. Those numbers come after December saw a tough 2.5% slide during the typically-busy holiday season.

Inflation, which quickly rose to 7% in 2021 (the fastest pace since 1982) and 7.5% in January, helped to pump the numbers up. The monthly sales are also up 13% from a year prior, while sales from November to January 2021 were up 16% from that same period in 2020.

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Furniture and home furnishing stores saw a 7.2% change, while online retailers led the way with a 14.5% rise. Rounding out the top producers is motor vehicle dealers with 5.7%. Meanwhile, electronic and appliances stores registered a 1.9% rise, while food and restaurants saw a 0.9% decline due to rising fears and increased precautions over the spreading COVID-19 variants.

Bankrate.com senior industry analyst Ted Rossman explained to ABC News that Omicron cases — along with the cost — could be the culprit for falling gasoline prices as well, which declined 1.3%. However, gasoline stations saw the biggest year-over-year jump with 33.4%. According to AAA, the average price for a gallon of gas currently sits at around $3.5 dollars, up from $2.5 dollars a year ago.

This economic resilience in the face of a new COVID wave is certainly one to be admired. Omicron looked to be more dangerous and contagious than the Delta variant, and the U.S. endured a pandemic-high 1.4 million new cases on Jan. 10. With workers out sick, a shortage began, forcing many stores to cut hours.

However, cases have since seen a decline, with the current seven-day average laying around 141,000. In addition to retail sales, jobs also prevailed despite the surge – nonfarm payrolls rose by 467,000 last month, 150,00 more than Wall Street’s estimate, while the unemployment rate increased by 0.1% to 4%. Wages increased 0.7% on the month and 5.7% for the year, the biggest yearly move since May 2020. Even with inflation, consumers were able to spend more freely with the extra cash.

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“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,” PNC chief economist Gus Faucher told CNBC.

Among other monthly declines include sports, music, and book stores (-3.0%, the highest decline endured by any retailer), health and personal stores (-0.7%), and miscellaneous store retailers (-0.1%). The only retailer that saw a year-over-year decline was electronics with -2.9%.

While clothing retailers had a meager 0.7% rise, they finished third overall in year-over-year change with +21.9%, behind gas and food and restaurants (+27%). The overall rate greatly outperformed economists’ predictions, which expected the final total to fall around a 2% rise. The report covers only a third of overall consumer spending, and doesn’t include services like plane tickets.