Retail sales in the US soared 0.6 per cent month-over-month in December, following a 0.3 per cent increase in November, according to the Commerce Department’s Census Bureau.

December’s growth was the biggest in three months, beating previous forecasts of a 0.4 per cent increase.

On a year-on-year basis, US retail sales were up 5.6 per cent in December. For 2023, unadjusted retail sales increased 3.2 per cent.

Neil Saunders, MD of GlobalData, said the country’s retail sector ended the year with a “solid note”, which shows that consumers pulled out all the stops to enjoy themselves over the holiday period. 

Food and grocery stores posted sales growth of 1.0 per cent, with underlying volumes flat on last year.

“The direction of travel in grocery suggests that as inflation continues to ease into this year, retail performance will be impacted on both the top and bottom line,” Saunders elaborated.

Beauty and electronics retailers also saw very strong gains, and apparel sales increased by 3.7 per cent on a value basis, accompanied by some underlying volume growth.

“While fashion retailers had to work hard to stimulate consumers into buying via discounts and deals, there was a lot of consumer interest in party and dressy outfits in December,” said Saunders.

On the losing side of the equation, furniture and home stores and home improvement retailers both saw sales slumps of 7.2 per cent and 5.7 per cent, respectively. 

Department stores are also at risk of continuing to lose out on customer and market share during the festive season, the analyst added.

Despite an overall good year, Saunders warned that many issues – including high consumer debt – will carry over into this year, making it difficult for retailers to maintain the momentum.