Retail Sales Dipped Slightly in January

The Advance Retail Sales Report from the Census Bureau showed consumer spending was down less than feared in January. Headline sales declined 0.2 percent, a step down from December's flat reading but better than the projected 0.3 percent decline. However, better days may be on the horizon for retailers. Economists widely expect bigger tax returns this year to perk up spending in the first half of 2026, offsetting the risks to spending. Federal tax refunds are coming in nearly 20 percent higher than 2025, according to Ben Ayers, senior economist at Nationwide.

Total Retail's Take: January proved to be a bit of a mixed bag for the retail industry. There is of course the slowdown in spending that's expected post-holiday season, and then severe winter weather throughout most of the country depressed store traffic and sales. However, with consumers stuck inside they opted to shop online more frequently. Online retailers reported a 1.9 percent sales increase in January.

The big question for the near future as it relates to retail sales is how rising gas prices in the wake of the Iran conflict will impact consumer confidence and spending. Will an increase in gas prices tamp down spending in other categories? And will larger tax refunds help to spur increased spending? These answers aren't likely to be known until March and April sales numbers are released. For now, retailers should plan for cautious consumers that are prioritizing value in their purchases.