Retail Spending Data Indicates Contrasting Trends

The latest data from the CNBC/NRF Retail Monitor for December reveals a mixed picture of consumer spending. While retailers experienced a solid increase in sales to conclude the holiday season, the report also points to new challenges, particularly deflation. Excluding automotive and gasoline purchases, the Retail Monitor registered a 0.4% rise, a slight dip from the previous month's 0.8% gain. Notably, core retail sales, which exclude restaurant purchases, saw a more modest 0.2% increase following a 0.7% rise in the preceding month. The overall year showed a 3.1% uptick in retail sales and a 2.4% increase in core sales. However, the housing industry slowdown dampened spending, especially in categories such as electronics and appliances, building supplies, and furniture. Moreover, the impact of deflation was evident, with prices for goods (excluding food and energy) declining over six consecutive months. This trend affected sales, particularly in clothing and accessories. There are concerns about retailers' ability to maintain profit margins amidst falling prices and the overall management of costs. Despite these challenges, some companies have reported better-than-expected holiday sales, with the holiday season showing a good, albeit not exceptional performance. The data is gathered from over 9 billion annual credit and debit card transactions, providing a different perspective compared to the Census Bureau's retail sales report. While the government data is subject to revisions, the CNBC/NRF Retail Monitor is based on actual transactions and is not revised after its initial publication.