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Retail and food services sales fell 0.9 percent in January, according to Census Bureau data released on Friday, Feb. 14. The decline reversed the trend from December 2024's revised increase of 0.7 percent, signaling that consumers may be feeling the squeeze from rising prices.
Economists had predicted only a slight decline, with Dow Jones estimating a 0.2 percent drop, NBC News reported. The sales totals were seasonally adjusted but not for January's 0.5 percent monthly inflation.
Most industries experienced decreased sales from December 2024. Sporting goods, book, hobby, and musical instrument stores saw a 4.6 percent decline, while sales for motor vehicle and parts dealers dropped 2.8 percent.
Online retailers had a monthly decrease of 1.9 percent, and furniture and home furnishing sales slipped 1.7 percent. Dealers selling building materials and garden equipment saw sales drop 1.3 percent, while stores for clothing and accessories had 1.2 percent fewer sales.
Some industries did see a monthly sales bump. Restaurants, bars, and gas stations posted 0.9 percent increases.
The slowdown in consumer spending comes as inflation unexpectedly accelerated in January, adding pressure to President Donald Trump's "day one" promise to immediately rein in high prices. The Consumer Price Index (CPI) rose 3.3 percent for core items (which exclude volatile food and energy prices), slightly exceeding economists' expectations of 3.2 percent inflation.
Egg prices saw the most dramatic spike, jumping 15 percent. That was the largest monthly increase since 2015, largely due to a bird flu outbreak that has forced retailers to limit carton purchases.
Housing costs, which account for nearly 30 percent of the CPI, rose 0.4 percent in January and 4.4 percent over the past year. Gas prices climbed 1.8 percent, overall energy costs rose 1.1 percent, and prescription drug prices increased 2.5 percent.
The new inflation data adds to scrutiny over Trump’s lack of progress on his “day one” pledge to lower consumer costs. Inflation was a key issue in the 2024 Presidential election, helping Trump return to the White House, but his tariff policies and threats—including a 10 percent tariff on Chinese goods and the reinstatement of a 25 percent tariff on steel and aluminum imports—have raised concerns about further price increases for consumers.
On Thursday, Feb. 13, President Trump also announced what he claims is a "fair and reciprocal plan" to match tax rates for imports charged by other countries, another move economists fear could raise prices.
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