U.S. December retail sales grew modestly, strong demand concluded the holiday season satisfactorily.

In December, retail sales in the United States generally increased, confirming strong consumer demand and marking a successful end to the holiday shopping season. Data released by the U.S. Department of Commerce on Thursday showed that retail purchases, not adjusted for inflation, increased by 0.4% after a revised upward growth rate of 0.8% in November, lower than the estimated 0.6%. Excluding automobiles and gasoline, sales increased by 0.3%, lower than the estimated 0.4%. Retail data showed that sales in the comparison group grew by 0.7% in December, the largest increase in three months. The retail sales in this group is an indicator used by the government to calculate the Gross Domestic Product (GDP), excluding food services, car dealers, building materials stores, and gas stations. Among the 13 categories in the report, 10 categories showed growth, including furniture and sporting goods stores. President-elect Donald Trump's threat to cancel tax breaks for electric cars and his plans to lower interest rates and increase incentives for manufacturers led to a 0.7% increase in car sales following strong growth in the previous two months. Gas station revenue increased, reflecting a rise in gasoline prices. The data released on Thursday showed that with wages rising faster than prices, consumers performed well during the holiday shopping season. Although potential inflation eased last month, Americans are still struggling with high living costs. Some retailers are considering raising prices due to the expected increase in import tariffs under President-elect Trump's administration. This could distort future retail sales data because they are not adjusted for inflation, growth may simply reflect price increases rather than an increase in sales activity. Retail sales have grown by 3.8% since December 2023, slowing down compared to the previous three years but not significantly declining under the pressure of high prices and borrowing costs. Consumer and business confidence has been rising since the election, but inflation expectations are also on the rise. Therefore, it remains to be seen whether the increase in confidence will increased spending. Data released on Wednesday showed a slight decline in the core Consumer Price Index in December, leading several Federal Reserve officials to believe that price pressures will continue to ease. Decision-makers may keep interest rates unchanged at their meeting late this month, but the CPI data could provide the possibility of a rate cut in March much earlier than previously expected. In the latest three months, sales in the comparison group grew at an annual rate of 5.4%, indicating a strong performance in the fourth quarter following a strong third quarter GDP growth. Ahead of an industry conference held in Orlando, Florida this week, several consumer companies released their financial reports on Monday, providing a mix of positive and negative performance outlooks. Macy's Inc. released a pessimistic forecast for quarterly sales, while other retailers such as Lululemon, Shake Shack, American Eagle Outfitters, Inc., and Urban Outfitters reported positive sales performance. Retail sales data are not adjusted for inflation and mainly reflect purchases of goods, which account for a relatively small proportion of overall consumer spending. Personal consumption expenditure data, to be released on January 31, will provide more detailed information on goods and services spending in December after adjusting for inflation. Spending on restaurants and bars is the only service sector category in the retail report, declining by 0.3%, marking the largest decrease since early last year.