US retail sales fell 1.9% in December from the previous month. This was well below market expectations, a month-on-month decline of 0.1%, and marks a sharp slowdown from November’s growth rate of 0.2% (downward revised from 0.3%). This means that the annual growth rate in retail sales has dropped to just under 17% from 18.24% in November. Core retail sales reported a larger month-on-month loss, down 2.3% in December to forecast 0.2% gains and up 0.1% in November (revised down from 0.3%). ) pointed to poor performance. The retail control group, which is more closely related to the retail consumption component of US GDP, fell 3.1% month-on-month compared to expectations for an increase of 0.1% in December.
If we look at the sub-items; Furniture fell 5.5%, sports equipment 4.3%, electronics 2.9%, gas stations 0.7% and automotive 0.4%. While general retail sales decreased by 1.5%, shopping malls decreased by 7% and online sales by 8.7%. Since both physical and online sales have decreased, there is nothing to be associated with the Covid epidemic. The effect on the private consumption side of daily use is felt in the general declines. We can summarize it as follows; goods inflation is on the rise, and upfront consumption for reduced purchasing power provided high realizations in the previous months, while the passing of the one-time consumption effect causes slower rates in the following months. So it’s not a result of Omicron activities or a decrease in consumer confidence, but a result of early shopping and forward demand. Inflation is now more determinant in consumer behavior than Covid.
Cost inflation may be resolved by easing supply constraints. In terms of demand inflation, if the effect of front-loading demand eases, we may see a normalization. There is no reason to panic for the Fed. Only tightening can be continued by keeping it on a more comfortable ground and comfort zone. In this respect, the partial cooling effect on inflation is important, at least the stagnation of the series will ensure that it does not act too hastily. But tightening is coming, balance sheet growth will stop and it will be normalized over time. Consumer demand should continue at a sustainable point after seasonal fluctuations are excluded. If it supports growth and does not create hyperinflation, it is fine.
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