Retail sales rose 0.3 percent in February from the prior month, the Commerce Department reported on Wednesday, a slowdown in spending that suggested inflation was taking its toll on American consumers.
The slower growth — January’s retail sales increased 4.9 percent, revised data showed — followed other indications that consumers were growing more pessimistic as they faced persistently rising prices with no end in sight. Last week, the government said the Consumer Price Index, a widely watched inflation gauge, rose 7.9 percent in the year through February, the fastest annual inflation in 40 years.
Wednesday’s report did not reflect the full effects of the Russian invasion of Ukraine, which began on Feb. 24 and triggered a surge in global energy costs. In the United States, gasoline prices have soared past highs last seen in 2008, an increase that will eat into consumers’ ability to spend on other goods.
“Inflation is crimping into household purchasing power,” said Beth Ann Bovino, the U.S. chief economist at S&P Global, the owner of stock indexes like the Dow and the S&P 500. “Even if wages are high, inflation for goods is even higher. You want to celebrate that larger paycheck, but you can’t because you can’t buy as much stuff with it anymore.”
The University of Michigan’s Index of Consumer Sentiment released this month showed that consumers were pessimistic about the year ahead because of inflation and the potential impact of the Russian invasion of Ukraine.
The data released on Wednesday was not adjusted for inflation, meaning rising prices were most likely inflating the sales data. For example, the report showed that spending at gasoline stations rose 5.3 percent in February, when gas prices rose more than 10 percent for the month.
Sales at restaurants and bars were up 2.5 percent, while spending at clothing stores was up 1.1 percent. Car dealers also saw an increase despite the global chip shortage, ticking up 0.8 over the previous month.
But there were notable declines in other categories. Spending at electronics and appliance stores, furniture stores, and health and personal care stores was lower. E-commerce was down considerably, dropping 3.7 percent from January.
The data was released the same day the Federal Reserve lifted interest rates, which will raise borrowing costs, to combat inflation. The move could further dampen spending by consumers and businesses.