“If they get it on Dec. 25, they probably take it out in January when they’re done with their festivities,” Ms. Bovino said, noting that shoppers may be more forgiving of higher prices when “they are buying with other people’s money.”
Plus, spending patterns have become less predictable during the pandemic, complicating efforts to predict what will happen next. Before the pandemic, holiday shopping would push retail sales higher in December, and a slowdown in spending would be reflected in January. This year’s gain followed a drop in December that on Wednesday was revised to 2.5 percent.
Still, Ms. Bovino noted that “people were still spending” in January, and the purchasing was broad-based: Sales at car dealers rose 5.7 percent over the previous month, while e-commerce sales rose 14.5 percent. Spending at electronics and appliances stores rose 1.9 percent, and sales at clothing and general merchandise stores, such as department stores, were higher as well.
The effect of the latest coronavirus wave was evident in some sectors. Spending at restaurants, bars and gas stations fell about 1 percent as people stayed home. But overall, sales in January rose far faster than the 2 percent gain economists had expected.
What is inflation? Inflation is a loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation and toys.
Consumers were spending even as they faced fast-rising prices and short supplies of new cars, appliances and much more. Consumer prices in January increased 0.6 percent from the prior month, the government said last week, and 7.5 percent from 12 months earlier. Supply-chain woes coupled with strong consumer demand pushed prices higher through all of last year.
Several consumer products companies have said recently that sales have held up even as they have increased prices to offset higher labor and transportation costs. Procter & Gamble, the maker of Crest toothpaste and Tide detergent, said last month that price increases helped drive revenue 6 percent higher from a year earlier, to $21 billion in the three months that ended Dec. 31.
Kraft Heinz reported on Wednesday that it raised prices 3.8 percent from a year earlier in the three months that ended in December. Its sales slipped in the quarter but were stronger than analysts had expected, thanks largely to the price increases.