Retail sales jumped in January, another sign of the economy’s resilience.
Another was that people use gift cards in January, after receiving them as Christmas presents. Sales of gift cards don’t show up in the data until they’re used, she said.
“If they get it in Dec. 25, they probably take it out in January when they’re done with their festivities,” Ms. Bovino said, noting that shoppers may be more forgiving of higher prices at the checkout stand when “they are buying with other people’s money.”
Inflation F.A.Q.
What is inflation? Inflation is a loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation and toys.
Still, Ms. Bovino noted that “people were still spending” in January, and it was broad-based: Spending at car dealers rose 5.7 percent in January over the previous month, while e-commerce sales rose 14.5 percent. Spending at electronics and appliances stores rose 4.6 percent, while sales at clothing and general merchandise stores, such as department stores, were higher as well.
The effect of the latest coronavirus wave was evident in some sectors. Spending at restaurants, bars and gasoline stations fell about 1 percent as people stayed home. But overall, sales in January rose far faster than the 2 percent gain that economists had expected.
The gain followed a drop in December — which on Wednesday was revised to 2.5 percent — that reflected an earlier than usual start for holiday shopping amid product shortages and rising prices.
Consumers are spending even as they face fast-rising prices and short supplies of everything from new cars to appliances. Consumer prices increased by 7.5 percent in the year through January, the government said last week, and supply chain woes coupled with strong consumer demand pushed prices higher all through last year.
Several consumer products companies have said recently that sales held up even as they increased prices for products during the last three months of the year to offset higher labor and transportation costs. Procter & Gamble, maker of Crest toothpaste and Tide detergent, said last month that price increases helped drive revenue 6 percent higher from a year earlier, to $21 billion, in the three months that ended Dec. 31.
Kraft Heinz reported on Wednesday that it raised prices by 3.8 percent in the three months ended in December, compared to the same time last year. Its sales slipped in the quarter but were stronger than analysts had expected, thanks largely to the increases.
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