Retail and restaurant sales edged to a new all-time high in February as Americans went shopping after the worst of the Omicron wave

• Spending at US retailers and restaurants rose 0.3% through February as inflation intensified.
• That came in just below the forecast for a 0.4% gain and marked a slowdown from January's huge 4.9% jump.

Americans reined in their spending boom through February as the coronavirus situation quickly improved and inflation soared to even higher levels.

Spending at restaurants and retailers gained 0.3% last month to a record $658.1 billion, the Census Bureau announced Wednesday morning. That landed just below the median forecast of a 0.4% jump from economists surveyed by Bloomberg. It also marked a significant cooling from January's 4.9% gain.

The January sales total was revised to $656.1 billion from $649.8 billion.

Core retail sales, which strip out spending on cars and vehicle parts, rose 0.2% through the month, falling short of the 0.9% estimate. That also reflected an easing from a 4.4% jump in January.

The report shows demand starting to cool as shopping habits crashed into even stronger inflation. Data out last week showed prices for goods and services ripping 7.9% higher in the year through February, marking the fastest pace of inflation since January 1982. Month-over-month inflation also accelerated, signaling supply-chain pressures and soaring energy costs remained major headwinds for businesses. While the month saw daily coronavirus infections plummet and the country broadly reopen, the sales data suggests high prices cut into the pandemic-era spending boom.

Sales rose the most at gasoline stations, with such businesses seeing a 5.3% month-over-month jump in February. The increase was at least partially powered by the jump in gas prices. Inflation data published last week showed gas prices climbing 6.6% in February alone. Since retail sales are reported in nominal dollars, the higher prices translated to increased spending and padded the overall bump in sales.

Restaurants and bars followed with a 2.5% gain in sales, according to the report. That follows a 1% contraction seen in January and suggests the swift decline in US virus cases sparked a return to the restaurant sector.

Conversely, nonstore retailers saw sales drop by 3.7% through February, more than any other category included in the report. The sector, which includes e-commerce platforms like Amazon, saw sales boom nearly 21% in January alone as the peak of the Omicron wave kept Americans stuck inside and more likely to buy goods online.

Sales also declined at grocery stores, furniture stores, electronics businesses, and health and personal care stores.

The report suggests spending could soon reverse course after surging through much of the pandemic. The passage of roughly $5 trillion in fiscal stimulus padded spending earlier in the crisis as Americans deployed direct payments and boosted unemployment benefits. The widespread aid has helped spending stage a historically fast recovery and move above its pre-pandemic trend. By comparison, it took roughly four years for retail sales to fully rebound during the Great Recession.

Consumer spending counts for about 70% of economic activity, and the latest sales report signals there's still plenty of fuel left to keep the recovery alive. Yet that overwhelming demand also risks keeping inflation at elevated levels. Supply strains continue to rock the US economy and keep businesses from servicing shoppers' rampant spending. With demand still running strong, it's increasingly looking like the inflation problem will have to be solved from the supply side.