Retail sales fell 1.9% in December, the Commerce Department reported Friday, reflecting a slowdown during an otherwise robust holiday shopping season that started earlier in the year for many consumers.

It was the first drop after four straight months of sales increases, although the gain in November slowed from October because of the lengthened holiday shopping season brought on by fears of product shortages and price increases. Total sales for October through December were up 17.1% from the same period a year earlier, according to the report. December sales rose 16.9% from 2020.

Beth Ann Bovino, chief U.S. economist at S&P Global, said that although there was bound to be “headline shock” over a weaker number, the broader picture for retail sales has been strong over the past few months.

“This is not a sign of consumer weakness,” said Bovino, who had forecast a decline. “Given that households have relatively strong balance sheets with high savings levels and a strong job market with wages climbing higher, it seems that consumers are not necessarily closing their pocketbooks. They’re taking a brief pause.”

The retail sales report provides a data point on the mindset of consumers after a report this week showed that inflation climbed to its highest level in 40 years at the end of 2021. Prices have increased as new variants of the coronavirus have exacerbated supply chain issues and robust consumer demand for goods. At the same time, the omicron wave has caused widespread staffing shortages and may have played a role in diverting some consumers from stores and holiday gatherings.

Bovino said she did not believe that inflation played a role in the overall sales decline but that concerns around higher prices were likely to show up in the first quarter of this year.

Economists at Morgan Stanley had forecast retail sales to rise 0.4% in December. Even though inflation topped the coronavirus as the No. 1 concern for consumers it surveyed in November, that “came with no dent to spending plans,” they said in a note last week.

Instead, the holiday shopping season appeared to break records and lower-income consumers seemed to be operating with relatively better buying power, the economists wrote. At the same time, they anticipated that the omicron wave drove more spending to goods rather than services.

The pandemic has continued to shape U.S. consumer habits.

Fewer people shopped in stores this holiday season, even though the omicron variant did not become a prominent threat until December. Retail foot traffic in the United States was down 19.5% between Nov. 21 and Jan. 1 compared with 2019, according to Sensormatic Solutions. That was a slight improvement from the depths of the pandemic in 2020, when foot traffic was down 33.1% in the same period compared with 2019, but still a significant change.

As retailers grapple with inflation and supply chain issues, it has given an additional advantage to the biggest U.S. retailers. They had already benefited during the pandemic by being able to remain open while others closed, from the variety of goods that they carry and through initiatives like curbside delivery.

“We’re talking about the Walmarts and Targets and Costcos, the big players,” said Mickey Chadha, a retail analyst at Moody’s Investors Service. “They’ve leased their own ships, and they’re bringing in product. They have a lot more power with vendors to get priority. And they actually planned ahead as well.”

At the same time, Chadha said, they have not had to raise their prices as much as smaller retailers and are likely to benefit as lower-income consumers search for value to stretch their dollars.

“They are taking market share because they have the ability to price lower and absorb that hit to the margin a lot better than some of the smaller, weaker retailers,” he said.

Costco, for example, said on a December earnings call that it believed it was successfully managing the effects of inflation through its relative purchasing power and its relationships with vendors. That often meant that Costco and its suppliers were each taking less in the way of price markups, Richard Galanti, the company’s chief financial officer, said on the call.

“We’ve always said we want to be the last to raise the price and the first to lower the price, recognizing there’s a limit to what you can do based on these cost increases,” Galanti said.

Costco also acknowledged that although it was grappling with unavoidable supply chain issues, including delayed container arrivals on the West Coast, it felt “pretty good about staying in stock.”

Plenty of other retailers have said supply chain issues cut into their revenue last year, as pandemic-related factory closures in Vietnam and shipping delays kept goods from American shelves and warehouses.

“Holiday was weaker than expected as units that were slated to arrive in December did not clear through the ports in the time frame we had anticipated,” Fran Horowitz, CEO of Abercrombie & Fitch, said at a conference Tuesday. “This was beyond our control and resulted in a miss of sales during the peak selling period. Beyond those delayed units, we also experienced renewed COVID-related restrictions globally.”

Still, some retail executives have said that they would rather have a supply issue than a demand issue, particularly given the sharp ebbs and flows in consumer preferences in the past 18 months. And it is not yet apparent whether price increases are tamping down demand given the quarterly performance.

Chadha said retail sales were strong for 2021 overall, although he anticipated that the picture would change in 2022, as supply chain issues and higher prices became bigger factors.

Bovino said she expected more selective purchasing to take hold later this year as savings accounts begin to deplete and consumers “remember what prices used to look like.”

January retail sales may also be affected by shortened store hours and closures as the omicron wave causes widespread staffing shortages in multiple industries.

This article originally appeared in The New York Times.

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