US retail sales declined by 0.2 percent in January, according to delayed government data released on Friday, falling short of some analysts’ expectations as concerns grow about slowing consumer spending in the world’s largest economy.

Decline Across Key Sectors

Overall retail sales fell to $733.5 billion in January, a decrease from December’s flat growth, though they were up 3.2 percent compared to the same period last year, according to the US Commerce Department.

The data showed a month-on-month decline in spending across several sectors, with the most significant drops in health and personal care stores, which fell by 3.0 percent, and fuel pumps, which declined by 2.9 percent. Clothing sales also dropped by 1.7 percent, while auto sales fell by 0.9 percent.

Analysts noted that the decline in retail sales may have been influenced by severe weather conditions that affected much of the country during January. Michael Pearce, chief US economist at Oxford Economics, stated that the winter weather could have significantly impacted consumer behavior.

Offset by Online Retail Growth

Despite the overall decline in retail sales, spending at nonstore retailers, including online outlets, increased by 1.9 percent, partially offsetting the drop in brick-and-mortar sales.

Pearce warned that rising fuel prices, driven in part by the ongoing US-Israel war on Iran, could pose a challenge in the coming months. According to the AAA gas prices gauge, average US gasoline prices increased by about 11 percent in the last week of January.

Pearce highlighted that the increase in fuel prices could add as much as 0.3 percentage points to inflation this year, which could reduce real incomes and spending on other goods and services.

Expectations for Recovery in February

The US economy received additional economic data on Friday, with an unexpected drop in jobs in February and a slight rise in unemployment. However, Nationwide Senior Economist Ben Ayers anticipated a rebound in spending activity in February.

Ayers noted that larger tax refunds and fiscal stimulus measures could boost consumer spending in the coming months, especially as winter storms begin to recede across much of the country.

President Donald Trump’s expansive tax policy, known as the ‘One Big Beautiful Bill,’ extended tax breaks from his first term, with analysts expecting increased tax refunds, primarily for middle and high-income earners, this year.

The data comes at a time of heightened scrutiny over the US economy, with consumers showing signs of caution amid rising prices and uncertainty over the future. While some analysts remain cautious, others see potential for a rebound as economic conditions stabilize and fiscal stimulus takes effect.