Retail trade sales saw a 4.3 percent annual gain and were up 0.8 percent from November to December.
US holiday sales rose a stronger-than-expected 4 percent to $658.3 billion, helped by an improving economy and attractive deals from retailers, leading retail industry group National Retail Federation said.
Excluding the large auto sector that accounts for 20% of overall retail business, sales rose a disappointing 0.2% in the final month of the year.
USA holiday sales grew a bit faster than expected, the National Retail Federation said, as surging e-commerce orders helped make up for weak department-store traffic.
Electronics and appliance store sales were off 2.4% in December from a year ago and down. What's more, home values have risen, as has the stock market, making shoppers feel wealthier, and more eager to shop.
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Sales of health and personal care items rose 6.7 percent, while furniture sales rose 4.8 percent, and clothing sales rose 2.5 percent.
The Fed raised its benchmark overnight interest rate last month by 25 basis points to a range of 0.50 percent to 0.75 percent. The increase for the fourth quarter over the same period previous year was 12.8%. Department store giants Macy's (M.N) and Kohl's Corp (KSS.N) last week reported drops in holiday sales. The bureau adjusts its figures for seasonal variation and holiday and trading-day differences, but not for price changes, so the latest data isn't a reflection of the holiday spike in sales, but part of a broader increase.
Department stores have faced stiff competition from online rivals including Amazon.com (AMZN.O).
Excluding auto sales, retail sales inched up by 0.2 percent in December after rising by 0.3 percent in November. And Americans' paychecks are getting fatter: Average hourly pay rose 2.9 percent in December from a year earlier, the most in seven years.