December 2021 Retail Sales:

The Commerce Department reported on Friday that retail sales fell far more than expected in December as soaring prices weighed heavily on spending.

The advance report on monthly sales through the end of the year showed a 1.9% drop, well below the Dow Jones estimate of just a 0.1% drop.

Excluding cars, sales fell 2.3%, also well below expectations for a 0.3% increase.

In addition to the weak December data, November’s increase was also revised down to 0.2% from an initially reported 0.3%.

Taking into account that the sales figures are not adjusted for inflation, the data suggest that sales in an otherwise strong 2021 will rise by 16.9% from a 2020 ravaged by the pandemic.

A shopper walks out of a Walmart with a full shopping cart in Westminster, Colorado, on November 26, 2021.

Michael Chaglo | Getty Images

The consumer price index rose 0.5% this month, bringing the year-over-year gain to 7%, the highest level since June 1982. Wholesale prices also rose, rising 9.7% in 12 months, the biggest gain on record as data goes all the way back to 2010.

Online spending as a share of total spending was hit the hardest, with non-brick-and-mortar retailers reporting an 8.7% plunge this month. Furniture and homeware sales fell 5.5%, while sporting goods, music and bookstores fell 4.3%.

Emerging omicron cases have done damage across the board as consumer activity has waned.

Restaurants and bars led all categories with an annual growth rate of 41.3% in 2021, but fell 0.8% this month. Gas stations followed this year, with sales soaring 41%, but fell 0.7% in December due to lower fuel costs. Gasoline fell 0.5% to end the year when oil sump prices surged 49.6%.

Only two categories posted gains this month: grocery retailers up 1.8% and building materials and garden centers up 0.9%.

A separate report from the Labor Department on Friday showed import prices fell 0.2% for the month, missing expectations for a 0.2% gain, the first negative number since August, largely due to a 6.5% drop in imported fuel prices. .

The figure offers some hope that the inflation surge may subside, even though much of the action comes from falling oil prices.

Fed officials have been stressing the importance of containing inflation in recent days, with several policymakers saying they expect to start raising rates as early as March. The Biden administration, along with central bank leaders, has blamed much of the rise in prices on pandemic-specific factors, such as huge demand for commodities, rather than service and supply chain issues.

However, the price surge came after fiscal and monetary policy injected unprecedented levels of cash into the economy.