After reporting a substantial rebound in U.S. retail sales in the previous month, the Commerce Department released a report on Wednesday showing a modest increase in retail sales in the month of February.
The Commerce Department said retail sales rose by 0.3 percent in February after soaring by an upwardly revised 4.9 percent in January.
Economists had expected retail sales to increase by 0.4 percent compared to the 3.8 percent spike originally reported for the previous month.
“U.S. retail sales settled back into a modest pace in February following some Omicron-induced volatility and acute seasonal adjustment noise at the turn of the year,” said Lydia Boussour, Lead U.S. Economist at Oxford Economics.
The uptick in retail sales was partly due to a 5.3 percent surge in sales by gas stations, which largely reflected higher prices at the pump.
Sales by bars and restaurants, sporting goods, hobby, musical instrument, and book store, clothing and accessories stores and miscellaneous store retailers also saw notable growth.
Meanwhile, the report showed sales by non-store retailers tumbled by 3.7 percent in February after skyrocketing by 20.6 percent in January. Sales by health and personal care stores and furniture and home furnishing stores also slumped.
Excluding a 0.8 percent increase in sales by motor vehicle and parts dealers, retail sales edged up by 0.2 percent in February after surging by 4.4 percent in January. Ex-auto sales were expected to advance by 0.9 percent.
The report showed core retail sales, which exclude automobiles, gasoline, building materials and food services, tumbled by 1.2 percent in February after spiking by an upwardly revised 6.7 percent in January.
“The current surge in non-discretionary inflation – particularly food, energy, and shelter – will pressure households’ budgets and lead them to pare back their discretionary purchases, while supply-chain issues will continue to constrain sales growth,” said Boussour.
She added, “But robust labor income growth, record levels of household wealth and ample excess savings worth 13% of GDP mean that consumer spending should remain supported in the months ahead.”