US retail sales plunged along with temperatures in January after a bustling holiday season

U.S. retail sales dropped sharply last month, in part because cold weather kept more Americans indoors, denting sales at car dealers and most other stores.

Retail sales fell 0.9% in January from the previous month, the Commerce Department said, after two months of healthy gains. It was a much bigger drop than economists expected and the biggest decline in a year.

The average temperature in January was the lowest since 1988, according to Pantheon Macroeconomics, and was particularly disruptive in the more temperate South. Devastating fires in Los Angeles may have also impacted...