Consumer spending remained high in January despite reports showing that inflation continued to rise in the new year. According to data from the Bank of America Institute, credit and debit card spending in January rose compared to February.
Spending per household increased by 5.1% compared to a year earlier, thereby also outpacing December’s 2.2% rise. Travel and eating out proved to be in particularly high demand among shoppers.
Mastercard largely agreed with the Bank of America Institute’s sentiment, with its SpendingPulse survey recording an 8.8% rise in retail sales excluding autos in January. This included a 24.2% rise in restaurant receipts.
A recent William Blair survey found that 35% of consumers had adopted the same spending habits, particularly on out-of-home entertainment, as before the pandemic. 30.2% of consumers assessed were found to be spending significantly more than pre-pandemic levels.
Economists at the Bank of America Institute have listed four main reasons for January’s rise in spending, including the recent rise in job growth, minimum wage increases, an 8.7% rise in Social Security benefits, and the belief that shoppers were waiting for post-holiday sales