WASHINGTON (NewsNation Now) — U.S. retail sales rebounded sharply in January after households received additional stimulus checks from the government, suggesting a pick-up in economic activity after being restrained by a fresh wave of COVID-19 infections late last year.

The surge in sales reported by the Commerce Department on Wednesday was across the board and ended three straight months of declines. Other data showed inflation pressures building up at the factory gate, with producer prices posting their biggest gain since January 2009.

Retail sales surged by a seasonally adjusted 5.3% last month. The Commerce Department data for December was revised down to show sales decreasing 1% instead of 0.7% as previously reported. It was the biggest increase since June and much larger than the 1% rise Wall Street analysts had expected.

Retail sales increased 7.4% from a year ago. Sales last month were led by motor vehicles, with receipts at auto dealerships accelerating 3.1% after increasing 2% in December. Sales at clothing stores soared 5%.

Consumers also stepped up spending at restaurants and bars, boosting receipts 6.9%. Still, sales at restaurants and bars were down 16.6% compared to January 2020.

Receipts at electronics and appliance stores powered ahead 14.7% and sales at furniture stores surged 12%. There were also hefty increases in sales at sporting goods, hobby, musical instrument and book stores.

Receipts at food and beverage stores rose solidly, as did those at building material stores. Online retail sales jumped 11% after dropping 7.3% in December.

Wednesday’s report covers about a third of overall consumer spending. It doesn’t include haircuts, hotel stays and other services, which have been badly hurt by the pandemic.

These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. They were previously estimated to have dropped 1.9% in December.

The government approved another coronavirus rescue package worth nearly $900 billion at the end of December, which included $600 checks to most Americans. The bulk of the money was disbursed in early January, which supported discretionary spending last month.

The package also extended a government-funded weekly unemployment subsidy, as well as benefits for millions of people who do not qualify for state unemployment programs or exhausted their six months of eligibility.

INFLATION FIRMING

Some of the sharp rebound was technical. The model used by the government to strip out seasonal fluctuations from the data typically anticipates a bigger post-holiday season drop in retail sales in January. The drop in unadjusted sales was smaller than in previous years, contributing to the big rise in the seasonally adjusted retail sales.

Further gains in sales are expected in the months ahead. Congress is considering President Joe Biden’s $1.9 trillion stimulus plan, which will include an additional $1,400 check to most households. The massive fiscal stimulus is expected to power consumer spending this quarter and drive faster economic growth.

COVID-19 infection rates and hospitalizations in the United States are declining while the distribution of vaccines has improved, possibly allowing for more restaurants and other consumer-facing businesses to reopen in the spring.

Employed Americans have boosted savings, which stood at $2.38 trillion in December. That could unleash pent-up demand for services like air travel and hotel accommodation, which have been hardest-hit by the pandemic.

The economy is forecast to grow by as much as 4.8% this year after contracting 3.5% in 2020, the biggest drop in gross domestic product since 1946.

Firming economic activity is starting to boost inflation. In a separate report on Wednesday, the Labor Department said its producer price index for final demand jumped 1.3% last month, the biggest gain since December 2009 when the government revamped the series. That followed a 0.3% rise in December.

In the 12 months through January, the PPI accelerated 1.7% after rising 0.8% in December. A 1.3% rise in the price of services accounted for two-thirds of the increase in the PPI. That was the biggest gain since December 2009 and followed a 0.1% drop in December.

The cost of goods surged 1.4% after gaining 1% in December. Inflation is under focus this year amid concerns from some quarters that Biden’s recovery plan could lead to the overheating of the economy.

Higher inflation is anticipated by the spring as price declines early in the coronavirus crisis wash out of the calculations, but there is no consensus among economists on whether it would stick beyond the so-called base effects.

Federal Reserve Chair Jerome Powell said last week he expected the rise in price pressures would be transitory, citing three decades of lower and stable inflation.

The Associated Press and Reuters contributed to this article: All reporting by Lucia Mutikani/Reuters and Joseph Pisani/AP.