Consumers were not afraid to spend in January despite rising inflation concerns.
According to new data released by the Commerce Department on Friday, consumer spending increased 2.1% last month to $337.2 billion.
The increase in spending in January reflected a bump of $285.4 billion in spending for goods and a $51.8 billion increase in spending for services. Within goods, increases were widespread, led by motor vehicles and parts, “other” nondurable goods, and recreational goods and vehicles. Within services, the largest contributor to the increase was spending for housing and utilities
The recent growth in household spending seems to be undeterred amid a period of record inflation driven by heightened consumer demand and supply chain challenges. Including food and energy prices, the Commerce Department said that consumer prices rose by 6.1% from one year ago, reflecting increases in both goods and services. On a monthly basis, prices rose in January by 0.6% from the prior month.
The same report showed that personal income was relatively flat for the month, increasing less than 0.1% to $9 billion in January. The Commerce Department noted that this stagnation was due to the ending of the Child Tax Credit but was partly offset by an increase in Social Security benefits.
This news comes as the U.S. Census Bureau reported earlier this month that retail and food service sales in January 2022 totaled $649.8 billion, marking a seasonally adjusted 3.8% increase from the previous month and a 13% leap from January 2021.
These figures match the data from the National Retail Federation (NRF) released earlier this month. NRF’s calculation of retail sales, which excludes automobile dealers, gasoline stations and restaurants, showed January was up 4.7% seasonally adjusted from December and up 8.5% unadjusted year-over-year.
January’s results follow a 14.1% year-over-year increase in retail sales as calculated by NRF during the November-December 2021 holiday season. Both the rate of growth and the $886.7 billion spent during the holidays were new records despite the pandemic and other factors.
“January’s numbers show that 2022 is starting very strong for consumers and retailers, especially on the heels of a record holiday season and record sales in 2021,” NRF president and CEO Matthew Shay said in a statement. “We are confident that retail sales growth and overall consumer financial health can continue, and current pressures in the economy should be moderated if election-year political pressures don’t result in policy decisions that compound the challenges our economy is already facing.”