Retail Sales Surge as Prices Rise and Shoppers Keep Buying

But those adjustments — the most drastic since the 1980s — seem like they may have temporarily dimmed strong demand rather than snuffing it out decisively. The housing market has cooled and consumer spending had shown clear signs of pulling back in recent months, but the labor market has remained very strong and some parts of the economy appear to be on the brink of accelerating again.

The retail sales report “suggests that any sign we got late last year that consumer spending was flagging was a bit of a false signal,” said Jonathan Millar, senior U.S. economist at Barclays. “It suggests that consumers are in pretty good shape here: The Fed’s rate hikes haven’t done a lot to slow spending.”

Mr. Millar said that some of the weakness in December sales could have come from cold weather and a holiday shopping season that started earlier because of promotions, including an Amazon sale day in October. Because January’s figures constituted a bounceback, they appeared unusually strong.

Other analysts suggested that spending may continue to be shaped by people’s response to the pandemic.

“People are back in stores. They’re figuring out what the future looks like working from home or hybrid,” said Katie Thomas, who leads the Kearney Consumer Institute, a think tank. “We put a lot of stock into assumptions of certain pandemic behaviors that didn’t end up being so sticky.”

The upshot for the Fed is that spending has retained momentum as a strong labor market supports shoppers, Mr. Millar said, explaining that policymakers may need to do more to wrestle inflation down.

Fed officials themselves have already hinted that they could raise rates higher. John C. Williams, the president of the Federal Reserve Bank of New York, said on Tuesday that he sees interest rates climbing to a 5 to 5.5 percent range, a bit above the median projection in the Fed’s latest set of forecasts, and added that they could go even higher if inflation proves difficult to slow.

But other economists discounted the latest retail numbers as a one-off blip.

A “good chunk of the January strength” in retail sales was probably linked to unseasonably warm weather and could reverse in the coming months, Kieran Clancy, senior U.S. economist at Pantheon Macroeconomics, wrote in a note. “That won’t stop markets fretting that the economy is impervious to the Fed, but we think that view is just wrong.”