Washington: US retail sales rose solidly in December as Americans shrugged off the threat of higher taxes and bought automobiles and a range of other goods, suggesting momentum in consumer spending as the year ended.
Other data on Tuesday showed inflation pressures remained muted, with wholesale prices declining for a third straight month in December. That should allow the Federal Reserve to stay on its very easy monetary policy path to nurse the recovery.
Retail sales increased 0.5% after rising 0.4% in November, the commerce department said. Economists polled by Reuters had expected sales to rise only 0.2%.
Sales were up 4.7% from December 2011 and rose 5.2% for the whole of 2012.
“That does suggest a resilient consumer in the face of the fiscal cliff debates. It offers a favorable sign for fourth-quarter growth,” said Joe Manimbo, a senior market analyst at Western Union Business Solutions in Washington.
So-called core sales, which strip out automobiles, gasoline and building materials and correspond most closely with the consumer spending component of gross domestic product, increased 0.6% after advancing 0.5% in November.
The second straight month of gains in core sales suggested consumer spending picked up in the fourth quarter after rising at a annual pace of 1.6% in the July through September period.
While economists did not immediately raise their GDP estimates for the final three months of 2012 in response to the data, they said the risks were tilted to the upside. Last week, analysts slashed their growth forecasts in the wake of a wider trade deficit in November.
Higher taxes are expected to keep consumer spending tepid early this year and a looming fight over raising the country’s debt ceiling could dent consumer sentiment.
Economists estimate that tax increases which kicked in this month could shave as much as 1.2 percentage points off consumer spending in the first quarter.
In a second report, the labor department said its seasonally adjusted producer price index slipped 0.2% last month. Economists polled by Reuters had expected prices at farms, factories and refineries to drop 0.1% last month.
Wholesale prices, excluding volatile food and energy costs, rose a modest 0.1%, in line with analysts’ forecasts.
Retail sales last month were up almost across the board, with receipts at auto dealerships rising 1.6% after increasing 2.7% in November.
Sales at service stations fell 1.6%, reflecting a 14 cent drop in gasoline prices at the pump. Receipts at gasoline stations declined 4.5% in November.
Sales at building materials and garden equipment suppliers were flat after rising 0.8%.
There were gains in furniture sales, while sales at clothing retailers rose by the most since February.
Receipts at sporting goods, hobby, book and music stores rose 0.6%. Sales at electronics and appliances shops fell 0.6%. REUTERS