U.S. retail sales rise just 0.1% in January; higher payroll taxes cited

Washington, DC, United States (4E) – U.S. retail sales last month slightly increased despite the rise in payroll taxes that held consumer spending down.

The 0.1 percent gain followed an unrevised 0.5 percent growth in December, according to the Department of Commerce data released Wednesday in Washington.

The latest figure was in line with analysts’ expectations. Economists predicted a pull back in spending as the payroll tax cut expired, making workers receive slightly lower paychecks.

The improving job market resulted to some gains in household disposable income, but this was offset by the higher payroll taxes that kicked in last month resulting to lower take-home pay.

During the same month, general merchandise stores recorded remarkably strong sales with sales from department stores increasing 1 percent from December.

Goods imported into the U.S. saw their prices increase last month for the first time in three months driven by higher cost of fuel and building materials, according to a Labor Department report also released on Wednesday.

Within the next few months, however, consumer spending is expected to weaken as department stores often sell full-price spring merchandise in February. In addition to higher taxes, consumers will likely feel the impact of more expensive gas. In the first two weeks of February, gas prices have risen 6 percent or about 20 cents more a gallon.

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