Retail sales slipped more than Wall Street expected in January, raising questions of whether America's resilient consumer could be losing steam.

Retail sales fell 0.8% in January from the month prior according to Census Bureau data. Economists had expected a 0.2% decrease in spending, according to Bloomberg data. December retail sales previously posted a surprise 0.6% increase but that was revised down to 0.4% in Thursday's release.

The month-over-month decline was the largest since March 2023.

January sales, excluding auto and gas, decreased by 0.5% compared to estimates for a 0.2% increase.

Nine of the 13 categories highlighted in the release saw decreases from a month ago. Building materials and garden equipment led the declines, dropping 4.1% while sales at miscellaneous store retailers fell 3%.

Meanwhile, sales at Furniture and home stores led the gainers, rising 1.5% from the month prior.

The January report was expected to be closely watched by investors looking for signs of a "soft landing" in the US economy, where inflation cools to the Fed Reserve's targeted 2% rate without an extreme downturn in economic activity.

"Overall, real consumption appears to have declined in January and, even allowing for a recovery over February and March, growth will slow sharply in the first quarter," Andrew Hunter deputy chief US economist wrote in a note to clients. "The upshot is that Fed officials may not need to worry much longer about the possibility of continued economic resilience reigniting inflation."

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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