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A file photo of shoppers paying for merchandise at the Macy's department store in New York. (MIKE SEGAR/REUTERS)
A file photo of shoppers paying for merchandise at the Macy's department store in New York. (MIKE SEGAR/REUTERS)

U.S. retail sales growth pauses as higher taxes kick in Add to ...

U.S. retail sales barely rose in January as tax increases and higher gasoline prices restrained spending, suggesting a slowdown in the pace of consumer spending early in the first quarter.

The Commerce Department said on Wednesday retail sales edged up 0.1 per cent after an unrevised 0.5-per-cent rise in December.

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The modest gain, which was in line with economist’s expectations, suggested that households were responding to the expiration of a 2 per cent payroll tax cut on Jan. 1. Taxes also went up for wealthy Americans.

So-called core sales, which strip out automobiles, gasoline and building materials and correspond most closely with the consumer spending component of gross domestic product, ticked up 0.1 per cent after gaining 0.7 per cent in December.

Consumer spending accounts for about 70 per cent of the U.S. economy and grew at a 2.2 per cent annual rate in the fourth quarter. The pace is expected to slow this quarter as households adjust to smaller paycheques and higher gasoline prices.

Sales were mixed last month, with receipts at auto dealers slipping 0.1 per cent after rising 1.2 per cent in December. Excluding autos, retail sales increased 0.2 per cent last month after advancing 0.3 per cent in December.

Sales at building materials and garden equipment suppliers rose 0.3 per cent, reflecting gains in homebuilding as the housing market recovery shifts into higher gear. Receipts at clothing stores fell 0.3 per cent.

Sales at restaurants and bars were flat, while receipts at sporting goods, hobby, book and music stores rose 0.6 per cent. Sales of electronics and appliances gained 0.2 per cent, while receipts at furniture stores fell 0.2 per cent.

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