American’s spending slowed in February amid surging inflation and gas prices, the U.S. Census Bureau announced Wednesday.
Retail sales grew 0.3% in February, a significant dip from January’s 4.9% monthly increase, the Census Bureau reported Wednesday. January’s spending increase marked the largest jump since March 2021 after Americans received the final $1,400 government stimulus check.
Gasoline sales surged 5.3% in February, while online shopping fell 3.7%, according to the Census Bureau. Business at restaurants surged 2.5% as consumers shifted to spending on services and COVID-19 cases fell.
Meanwhile, Americans faced the highest prices in 40 years, with the Consumer Price Index (CPI) surging 0.8% in February, bringing the key inflation indicator’s year-over-year increase to 7.9%, the U.S. Bureau of Labor Statistics announced Thursday.
Crude and natural gas surged almost 30% year-over-year as of February, while the war in Ukraine threatened to disrupt supply chains, limiting the supply of wheat, metals and electronic components, the Associated Press reported. Growing COVID-19 cases and renewed lockdowns in China, however, weakened sensitive supply chain systems.
“The current surge in non-discretionary inflation — particularly food, energy and shelter — will pressure households’ budgets and lead them to pare back their discretionary purchases, while supply-chain issues will continue to constrain sales growth,” Lydia Boussour, head U.S. economist at Oxford Economics, said in a statement.
The National Retail Federation (NRF) projected retail sales would slow to between 6% and 8% in 2022 from the record-breaking 14% annual growth rate set in 2021.
“NRF expects retail sales to increase in 2022, as consumers are ready to spend and have the resources to do so,” NRF president and chief executive officer Matthew Shay said in a press release. “We should see durable growth this year given consumer confidence to continue this expansion, notwithstanding risks related to inflation, COVID-19 and geopolitical threats.”
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