U.S. retail sales closed out 2025 with stronger-than-expected momentum, as holiday spending held near record levels, according to the National Retail Federation.
Total retail sales in December rose 1.26% month-over-month on a seasonally adjusted basis, while core sales climbed 1.6%, marking the largest increase of the second half of the year. On an unadjusted basis, total sales increased 3.54% year-over-year, with core sales up 3.58%.
Holiday demand proved especially resilient. Sales between Nov. 1 and Dec. 31 grew 4.1% compared with the same period in 2024, landing near the high end of NRF's forecast range of 3.7% to 4.2%.
"December Retail Monitor data saw a sharp surge in growth as consumers continued prioritizing holiday spending on family and friends," said NRF President and CEO Matthew Shay.
Beneath those headline gains, however, spending patterns varied widely by income and retail category.
Essential purchases remained steady across households. Utility spending rose 9% year-to-date compared with 2024, with gains spanning income levels, from 3.7% among the lowest-income households to about 10.5% in the middle-income brackets and 7.3% among the highest earners.
Consumer staples also edged higher, up 1.9% overall. But lower-income households pulled back, with spending down 1.7% in the bottom decile and negative through the 30th percentile before turning modestly positive among middle- and higher-income groups.
Discretionary spending showed the sharpest divide. Sales rose 1.1% overall, yet lower-income households cut back significantly, with declines of up to 3.8% in the bottom decile. Middle-income households posted mixed results, while the top-income decile saw a 2.3% increase in spending. The highest-earning 20% of consumers accounted for more than 60% of total discretionary growth, underscoring a K-shaped recovery in nonessential purchases.
Category performance reflected that imbalance. Department store sales rose just 1.4% overall and were driven entirely by higher-income shoppers, with the top decile posting a 3.2% gain. Wholesale clubs, by contrast, recorded 13.6% year-to-date growth across nearly all income groups, with double-digit increases among lower and middle-income households, highlighting the continued draw of value-focused retailers.
Overall, six of nine major retail categories posted year-over-year gains, led by clothing and accessories, sporting goods and digital products, the report said.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.