Indianapolis, February 11, 2026

December retail sales in Indianapolis showed little growth, missing forecasts and indicating a slowdown in consumer spending. Major sectors like apparel, electronics, and furniture saw declines, reflecting challenges faced by smaller retailers. Despite the tough environment, big-box stores managed to attract a diverse customer base. Overall, concerns around job markets and inflation contributed to the subdued spending during the holiday season, with implications for economic growth in 2026.

Indianapolis Retail Sales Fall Short of December 2025 Expectations

Consumer Spending Slows as Holiday Season Concludes

December 2025 retail sales remained flat, missing forecasts and indicating a slowdown in consumer spending.

In Indianapolis, the retail landscape faced a challenging end to 2025. December retail sales showed little growth after a modest increase of 0.6% in November. The overall sales figures did not meet the anticipated 0.4% rise, highlighting a decline in consumer demand as the holiday spirit faded. Though holiday retail sales saw an increase of 3.6% compared to the previous year, it fell short of the National Retail Federation’s projection of 3.7% to 4.2%. This waning enthusiasm can likely be attributed to tariff-induced inflation and heightened concerns about the job market.

Several retail categories that were expected to thrive during the holiday season did not resonate with consumers. Apparel store sales dipped by 0.7%, while electronics and appliance stores, health and personal care, and furniture sales dropped by 0.4%, 0.2%, and 0.9% respectively. The furniture sector, in particular, has been notably affected by increasing tariffs, with high-end stores managing to offset price hikes, unlike their discount counterparts.

The Bright Side for Big-Box Retailers

Despite the struggles of smaller retailers, big-box chains continued to outperform expectations, leveraging their pricing power to attract a diverse customer base, including affluent shoppers. The general merchandise category saw only a slight decline of 0.1%, showcasing that consumer loyalty to established brands remains a stronghold even during tougher economic times.

Dining and Entertainment Hit Hard

Consumer spending habits also shifted in dining and entertainment sectors, where sales decreased by 0.1%. This loss becomes more pronounced when adjusted for inflation, indicating a significant impact on discretionary spending during a season typically marked by celebrations. Online shopping reflected a similar trend, with a meager growth of just 0.1% in December.

Struggles with Big-Ticket Items

Sales of high-ticket items, particularly motor vehicles and parts, faced a setback with a decrease of 0.2%. Although car prices remained stable in December after previous increases, prolonged fiscal uncertainties led potential buyers to delay large purchases. This shift is evident as one in five new vehicle loans now stretches across seven years, and the average transaction price has exceeded $50,000.

Impact on Consumer Spending and GDP Projections

Core retail sales, vital for calculating consumer spending in relation to GDP, exhibited a decline of 0.1%, following a downward revision of 0.2% in November. This trend poses a mild downside risk to the previously projected growth rate of 3% for consumer spending in the fourth quarter, as well as a GDP growth forecast of 3.9%. Excluding categories such as eating and drinking places, vehicles, gasoline, and building materials, the slowdown in core retail sales suggests weakened consumer spending overall.

Looking Ahead to 2026

On a brighter note, households may find some financial relief early in 2026 as expansions to tax cuts in 2025 lead to lower withholdings and larger refunds. This change could stimulate consumer consumption in the first half of the year. Additionally, analysts predict that the Federal Reserve will consider interest rate cuts to support continued economic expansion, possibly easing rates by a total of 75 basis points throughout 2026.

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Author: STAFF HERE INDIANAPOLIS WRITER

The INDIANAPOLIS STAFF WRITER represents the experienced team at HEREIndianapolis.com, your go-to source for actionable local news and information in Indianapolis, Marion County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Indianapolis 500, Indy Jazz Fest, and the Indiana State Fair. Our coverage extends to key organizations like the Indy Chamber and Visit Indy, plus leading businesses in motorsports and healthcare that power the local economy such as Indianapolis Motor Speedway and IU Health. As part of the broader HERE network, we provide comprehensive, credible insights into Indiana's dynamic landscape.