December Retail Sales Report: Inflation Didn’t Slow Holiday Spending

The U.S. Commerce Department’s Census Bureau has released its December retail sales report and the economy is in full swing despite inflation. Retail sales increased by 0.4% that month compared to a 0.8% increase in November. Retail sales also increased by 3.9% year-over-year.

Furniture stores were behind much of that gain with a 2.3% increase in December. Miscellaneous store retailers rose 4.3% that month, while e-commerce only saw a minor 0.2% increase. Auto dealerships saw sales drive 0.7% higher while sporting, hobby, musical instrument, and bookstore sales experienced an impressive 2.6% boost.

What This Means for the Economy

The December retail sales report shows that consumer spending remains strong even as inflation weighs on the economy. With this spending in mind, the Federal Reserve will likely stick to its guns and avoid too many interest rate cuts in 2025.

Wells Fargo senior economist Tim Quinlan told Yahoo Finance “As long as households remain employed and are earning income, they likely will continue to spend.” He followed that up saying the December report “leaves the outlook for retail sales in a healthy place as we kick off 2025.”

How to Play the December Retail Sales Report

This latest report, alongside other economic factors, suggests retail stocks will perform well in 2025. Investors will want to consider taking stakes in retailers this year to benefit from this. There are plenty to choose from with grocery, department, and home improvement stores all offering attractive investment opportunities.

A few retail stocks that stand out from the rest of the pack include Walmart (WMT), Target (TGT), Costco (COST), Kroger (KR), and Home Depot (HD). Based on the TipRanks Smart Score tool, Walmart and Costco are the best bets as they both scored a nine out of 10. There are also other stocks worth comparing.

See more retail stock comparisons