Retail sales fell in December, highlighting how consumers’ concerns about inflation became the defining factor of the holiday shopping season.
U.S. retail sales fell 1.1 percent in December versus the month before, the Department of Commerce said on Wednesday. While the data is adjusted for seasonal variations, it does not account for price changes, and inflation continued to ease during the month, which would have contributed to the decline.
Retail sales in November were also revised to show a fall of 1 percent from October, worse than the 0.6 percent decline originally reported.
Sales were down in December at popular holiday shopping destinations like electronics stores, car dealerships and clothing outlets. Department stores posted a 6.6 percent decline from the previous month.
Other categories also took a hit, as stubbornly high inflation, rising interest rates and a slowing economy squeezed people’s wallets. While grocery stores saw a slight uptick in December sales, spending at restaurants, bars and health and personal care stores recorded a decline.
“The decline in December retail sales, which is on top of the decline in November, demonstrates that there are cracks appearing in the resiliency that consumers have shown in 2022,” Mickey Chadha, retail analyst at Moody’s Investors Service, said in an emailed statement.
Analysts will get a better perspective of how individual retailers performed during the crucial holiday shopping season when companies like Walmart, Target and Macy’s report their fourth-quarter earnings next month. Macy’s and Lululemon already warned Wall Street that aspects of their holiday performances were weaker than expected.
This year, retailers are bracing for consumers to spend more selectively compared with earlier in the pandemic, when shoppers bought goods with the help of government stimulus. The first few months of the year are usually slow ones for retailers, after the holiday rush.
Bed Bath & Beyond this month said that it was exploring a potential bankruptcy, as it continued to lose shoppers and sales. Party City said it was filing Chapter 11 bankruptcy on Tuesday as the company faced rising prices and consumers pulled back on spending. Layoffs are also hitting some of the stronger players in retail. Amazon on Wednesday is starting a round of layoffs that will eliminate 18,000 corporate and technology jobs, or about 6 percent of its corporate work force.