By Harriet Torry and Natasha Khan

Americans spent more at stores, auto dealerships and online to close out last year, suggesting consumers can continue to drive economic growth headed into 2024.

U.S. retail sales rose a seasonally adjusted 0.6% in December from a month earlier, the Commerce Department said Wednesday. It was a larger gain than economists expected and came after a 0.3% increase in November. The combined figures point to a solid holiday season for retailers.

From a year earlier, sales rose 5.6%. That was a slightly slower finish to the year than in December 2022, when sales rose 5.8% from a year earlier, but well outpaced inflation. The consumer-price index rose 3.4% in the year through December, a cool down from a 6.5% advance the prior year, according to the Labor Department.

Moderating spending growth and cooler price gains are consistent with an economy achieving a soft landing, where inflation is tamed without a recession.

Americans spent more on vehicles, clothing, at department stores and online in the final month of the year. Spending at bars and restaurants was flat in December, and it declined in categories including furniture, electronics and at health and personal care stores. Excluding spending on vehicles and at gasoline stations, retail sales also increased 0.6%.

Write to Harriet Torry at harriet.torry@wsj.com and Natasha Khan at natasha.khan@wsj.com

(END) Dow Jones Newswires

January 17, 2024 09:07 ET (14:07 GMT)