US retail sales beat expectations in January

US retail sales rebounded strongly in January amid a surge in purchases of vehicles and other goods, but higher prices could cushion the impact on economic growth this quarter.

The rise in retail sales was 3.8% last month, the Commerce Department said on Wednesday (16). December data was revised down to show a decline of 2.5% instead of 1.9% as previously reported.

Economists polled by Reuters had forecast a 2.0% rise in retail sales, with estimates ranging from 0.7% to 4.4%.

Excluding automobiles, gasoline, building materials and food services, retail sales rose 4.8% in January. December data was revised down to show a 4.0% drop in so-called core retail sales, instead of the previously reported 3.1%.

Core sales correspond more closely to the consumer spending component of GDP (Gross Domestic Product).

With higher prices accounting for part of the increase in sales, core retail inflation adjusted for inflation may have been weaker, which could keep consumer spending on a slower growth path at the start of the first quarter.

So-called real retail sales are important in measuring the growth of consumer spending. In December, real consumer spending dropped 1.0%.

Estimates of economic growth in the United States for the first quarter are largely below an annualized rate of 2%. The US economy grew at a rate of 6.9% in the fourth quarter. In 2021, growth was the strongest since 1984.

U.S. import prices rise by most in nearly 11 years in January

US import prices rose to their highest in nearly 11 years in January amid soaring energy costs and supply chain problems, the latest indication that high inflation may persist for a while.

Import prices rose 2.0% last month, the most since April 2011, after falling 0.4% in December, the Labor Department said on Wednesday.

In the 12 months through January, the rise in prices accelerated to 10.8%, compared to a rate of 10.2% in December.

Economists consulted by Reuters projected a 1.3% increase in import prices, which exclude tariffs.

The report comes after the news on Tuesday (15) that producer prices had the highest rise in eight months in January. Consumer prices also rose sharply last month, with the annual rate of inflation at a 40-year high.

Imported fuel prices soared 9.3% last month, while oil prices jumped 9.5% and imported food costs accelerated 3.6%.

Excluding fuel and food, the so-called core prices, import inflation was 1.1%, from 0.6% in December. On an annual basis, the increase was 6.2% in January.