Food prices declined in December for the first time since May, according to the Bureau of Labor Statistics.
Perhaps this was the reason retailer sales rose .5 percent in December, even though the fiscal cliff was approaching. While most prices on finished goods dropped, food prices had the largest decline. This was due to beef and veal prices 4.8 percent lower.
Overall, food prices dropped .9 percent. And in general, prices for finished goods fell .2 percent in December.
Because of the price drops, many companies didn’t suffer despite the approaching fiscal cliff through the Christmas season. Vehicle dealers, clothing retail, furniture and restaurants did well — all seeing somewhat of an increase, according to a Los Angeles Times article.
“The fiscal cliff debate weakened confidence more than it weakened actual spending as December sales finished the year in decent fashion,” the L.A. Times reported on a Credit Suisse analysis released Tuesday.
Paul Ashworth, chief U.S. Economist at Capital Economics, agrees with the analysts.
“That does suggest a resilient consumer in the face of the fiscal cliff debates. It offers a favorable sign for fourth-quarter growth,” said Joe Manimbo, a senior market analyst at Western Union Business Solutions in Washington, to Live Mint.
The increases in sales were more than anticipated, according to an article on RTT news. The growth in sales is not expected to continue however, as higher taxes set in this year.