WASHINGTON—U.S. retail sales increased by the most in nearly two years in January after two straight monthly declines as Americans boosted purchases of motor vehicles and other goods, pointing to the economy’s continued resilience despite higher borrowing costs.
Coming on the heels of news on Tuesday that monthly inflation picked up in January, signs of strength in consumer spending could fuel financial market speculation that the Federal Reserve could continue rising interest rates through summer to cool domestic demand.
“Although resilient consumer spending is a positive sign for the health of the economy, renewed demand for supply-constrained categories could add to inflation pressures, potentially eliciting more aggressive action from the Fed,” said Kayla Bruun, economic analyst at decision intelligence company Morning Consult….