December Retail Sales Slump, But Holiday Season Holds Strong

New York—U.S. monthly retail sales fell more than expected in December, bogged down by rising prices.
 
Sales were down 1.9 percent month-over-month in December to $626.8 billion, according to data from the U.S. Department of Commerce released last week, while year-over-year sales were up 17 percent.

The results fell short of analyst expectations of a month-over-month decrease of 0.1 percent.
 
November sales were slightly weaker than previously thought, up 0.2 percent month-over-month rather than the previously reported 0.3 percent, as per the revised figures.

The consumer price index, which measures the average change in prices over time consumers will pay for a basket of goods and services, rose 0.5 percent month-over-month in December and 7 percent year-over-year, with inflation rising at its fastest rate since 1982.

The National Retail Federation also calculates retail sales, but excludes auto sales, gas stations, and restaurants.

Its results show December sales were down nearly 3 percent seasonally adjusted month-over-month and up more than 13 percent year-over-year.

The NRF also took a look at the whole holiday season, which it defines as Nov. 1 through Dec. 31.

Sales for the period were up 14 percent year-over-year to $886.7 billion, a record number that flew past the NRF’s October forecast of a year-over-year increase between 8.5 percent and 10.5 percent to between $843.4 billion and $859 billion.

The results also exceeded the NRF’s raised guidance in December that expected growth as high as 11.5 percent.

“We closed out the year with outstanding annual retail sales and a record holiday season, which is a clear testament to the power of the consumer and the ingenuity of retailers and their workers,” said NRF President and CEO Matthew Shay in a press release about the results.

The amount spent and the growth rate surpassed the previous record set in 2020, when sales were up more than 8 percent year-over-year to $777.3 billion.

The average holiday sales growth rate over the past five years has been 4.4 percent.

Online sales, which include online and other non-store sales, were up more than 11 percent to $218.9 billion.

Online spending, which is included in the sales total, was in line with the NRF’s forecast, which predicted growth between 11 percent and 15 percent to between $218.3 billion and $226.2 billion.

Retail sales, both in store and online, thrived despite supply chain problems, rising inflation, labor shortages, and the omicron variant, noted Shay, bolstered by “strong wages and record savings.”

“The numbers are clear: 2021 was an undeniably outstanding year for retail sales,” said Shay.

However, there was a decline in sales from November to December, said Shay, due in part to an early shopping season.

Still, though shopping began in October for many, it was the strongest November and December yet, said NRF Chief Economist Jack Kleinhenz. 

“Worries about inflation and COVID-19 put pressure on consumer attitudes but did not dampen spending, and sales were remarkably strong,” he said.

November-December sales posted year-over-year gains in all categories, led by clothing and clothing accessory stores, sporting goods stores, general merchandise stores, and furniture and home furnishing stores.

The NRF is forecasting further growth in 2022, even as the battle against supply chain problems, labor force issues, and inflation continues.

“Holiday spending during 2021 reflected continued consumer demand that is driving the economy and should continue in 2022,” Kleinhenz said. “Nonetheless, we should be prepared for challenges in the coming months due to the substantial uncertainty brought by the pandemic.”

Though there have been occasional month-over-month declines, sales have grown year-over-year every month since June 2020, as per Census data.