The latest data from the CNBC/NRF Retail Monitor, in collaboration with Affinity Solutions, has revealed a contraction in consumer spending for January 2025 following the holiday season, yet still shows robust growth compared to the previous year. 

Retail sales, excluding automotive and gasoline transactions, experienced a 1.07% decline during the month on a seasonally adjusted basis from December 2024.  

However, an unadjusted year-on-year comparison for the same month shows a 5.44% increase.  

These figures present a contrast to December's performance, which saw monthly growth of 1.74% and an annual surge of 7.24%. 

Core retail sales, which exclude restaurants, car dealerships and gas stations, also saw a downturn of 1.27% month-on-month in January, according to the Retail Monitor.  

Despite this monthly setback, the sector still reported a significant 5.72% uptick on an annual basis.  

This performance aligns with the broader trend observed during the previous year, when core retail sales climbed by 4% over the holiday season and registered a 3.6% increase across the entirety of 2024. 

The US retail sector shattered previous holiday season records, with core retail sales during the period reaching $994.1bn against the previous year’s $955.6bn.   

NRF president and CEO Matthew Shay stated: “Consumers pulled back in January, taking a breather after a stronger-than-expected holiday season. Despite the monthly decline, the year-on-year increases reflect overall consumer strength as a strong job market and wage gains above the rate of inflation continue to support spending.  

“We’re seeing a choiceful [reflective] and value-conscious consumer who is rotating spending across goods and services and essentials and non-essentials, boosting some sectors while causing challenges in others.” 

A sector-by-sector breakdown reveals that seven out of nine categories witnessed year-on-year growth. Notably, e-commerce continued its upward trajectory alongside health and personal care stores, as well as clothing and accessory outlets. 

Online and other non-store sales rose modestly by 0.44% month-on-month but soared by 30.4% compared to January 2024.  

Sales in health and personal care stores saw a monthly increase of 0.77% and a year-on-year rise of 10.39%.  

In contrast, clothing and accessory stores experienced a monthly decline of 2.9%, but still posted a 7.6% increase compared to the same period of the previous year. 

General merchandise stores experienced a seasonally adjusted decline of 2.4% month-on-month but saw an unadjusted year-on-year increase of 7.5%.  

Grocery and beverage stores posted a modest seasonally adjusted drop of 0.2% month-on-month, while reporting an unadjusted year-on-year rise of 5.6%.  

Furniture and home furnishings stores not only saw a monthly decrease of 2% but also a slight annual reduction of 0.2%.  

Building and garden supply stores presented mixed results with a modest monthly gain offset by a slight yearly decrease.