U.S. retail spending and manufacturing slowed at the end of 2021 as the Covid-19 Omicron variant and inflation surged, early signs the latest complications from the pandemic could be weighing on the economy.

Sales at retail stores, online and restaurants dropped by 1.9%, damping the end of the holiday shopping season, the Commerce Department said on Friday. December’s sharp decline followed record-level retail sales that started with a 1.8% gain in October from the prior month.

Sales were up considerably over the past year, however. Retail sales grew 16.9% in December when compared with the same month a year ago, marking a resurgent period for consumer spending after a fuller reopening of the economy as vaccinations spread and government stimulus that left households flush with savings.

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