US retail sales plunged last month as consumers pulled back after busy holiday season

US retail sales plunged

Photo:AP

FILE - A table is stacked with striped lounge sets in a Costco warehouse Monday, Feb. 3, 2025, in east Denver. 

U.S. retail sales dropped sharply last month, in part because cold weather kept more Americans indoors and dented sales at car dealers and most other stores.

Retail sales dropped 0.9% in January from the previous month, the Commerce Department said, after two months of healthy gains. January's average temperature was the lowest since 1988, according to Pantheon Macroeconomics, and was particularly disruptive in the South, where such cold weather was unusual. Devastating fires in Los Angeles may have also impacted spending.

Sales dropped sharply last month at auto dealers, falling 2.8%, as well as at furniture stores, home and garden centers, and even in the usually strong online retail sector, where sales dropped 1.9%.

The decline could reflect declines in consumer confidence that were picked up in two recent surveys. Still, hiring and wage growth have been steady, suggesting the economy is still expanding. Last week the government reported that the unemployment rate fell for the second straight month to a low 4%.

Yet inflation ticked higher last month, underscoring its persistence despite the Federal Reserve's efforts to combat it with higher interest rates. Grocery prices jumped in January from the previous month, pushed higher by soaring egg costs.