WASHINGTON (AP) – Americans cut back on shopping last month as the holiday shopping season begins amid high prices and rising interest rates that are forcing some families, especially low-income ones, to cut back on their purchases.
The government said on Thursday retail sales fell 0.6% from November to December, after a sharp rise last month. Sales were down at furniture, electronics, and home and garden stores.
Inflation has been falling but remains high and is eroding the spending power of Americans. Consumer spending has been steady since inflation began to rise nearly 18 months ago, but Americans’ spending power may be starting to falter.
Greater employment, higher wages, and improved savings from government financial assistance during the crisis enabled more consumers to keep up with rising prices. Yet many Americans are holding onto their money to keep pace with inflation, which hit a fourteen-year high this summer and hit 7.1% last month. The savings rate fell to the second-lowest rate on record in October.
Americans are also putting more purchases on their credit cards. Total credit card debt jumped 15% in the July-September quarter, according to the Federal Reserve Bank of New York, the biggest jump in 20 years.
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