US retail sales dipped significantly more than expected in December as Americans wrapped up their holiday shopping — while also facing an uptick in COVID-19 cases, ongoing supply chain disruptions and decades-high inflation, according to data released Friday.
December retail sales fell 1.9% from November, the Commerce Department said — considerably more than the 0.1% decrease economists had expected.
Excluding vehicles and gas, retail sales were down 2.5% from November.
In addition, the Commerce Department revised the November gain to 0.2%, down from the initially reported 0.3%.
The December downtick also followed record figures in October, when retail sales jumped 1.8%.
However, annual growth in retail sales was still up 16.9% in December compared to one year earlier.
The Commerce Department’s data suggested a downtick in online buying activity despite the pandemic. Sales at non-store retailers fell 8.7% for the month.
Spending on furniture dropped 5.5% percent in December, while sales of electronics and appliances dropped 2.9%. Sales at restaurants and bars fell 0.8%.
Americans started their holiday shopping earlier than usual to account for warnings of shipping delays during the supply chain crunch, while US retailers offered holiday promotions ahead of schedule. Shopping momentum began to slow in November with retail sales falling short of economists’ expectations.
Supply chain issues have contributed to the inflation surge, which has caused the cost of everyday items like groceries and gas to skyrocket in recent months.
Inflation reached 7% in December, according to the latest Consumer Price Index data, the highest since mid-1982.
Meanwhile, retailers are dealing with staffing shortages driven by the Omicron variant and a tight US labor market. Earlier this week, Lululemon warned that Omicron could hurt its sales during the fourth quarter.
The Federal Reserve is expected to hike interest rates three or more times this year as part of its strategy to cool inflation.