Retail sales rose in February ahead of Iran War’s potential spending impact

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Retail sales got a higher-than-expected increase in February, rising 0.6% to $738.4 billion and 3.7% YoY, the Commerce Department said this week.

The boost marks a notable uptick after declines over the last few months, including a lackluster December. Sales dipped 0.1% in January, revised from the 0.2% reported last month.

Most categories saw sales bumps in February. Department stores saw the biggest sales increase (3%), though sales were down 5.4% YoY. Sales also rose month-over-month for health and personal care stores (2.3%), clothing and clothing accessories stores (2%), sporting goods stores (1.3%, and the greatest YoY sales jump at 11.3%), and at miscellaneous store retailers (1.1%). Nonstore sales, made up largely of e-commerce transactions, rose 0.7%, and electronics stores were up 0.5%.

Furniture stores had the biggest monthly and annual sales drop, down 1% and 5.6%, respectively, while grocery store sales dipped 1% month over month and 0.2% YoY.

The Commerce Department’s monthly retail sales reporting continues to be several weeks behind due to last year’s government shutdown. As such, the latest retail sales numbers don’t reflect any potential impacts from the US and Israel’s war with Iran—particularly consumers’ pullback on spending due to higher gas prices.

Heather Long, chief economist at Navy Federal Credit Union, said in emailed comments that February’s retail sales indicate the economy “was healthy” before the war.

“Four-dollar gas has changed the story,” she said. “It’s shaping up to be a slow-speed spring as the economy faces this massive shock.”

Consumer sentiment hit its lowest level since December 2025 in March 2026, driven in part by higher gas prices, the University of Michigan reported last week. The Bureau of Labor Statistics is set to release the Consumer Price Index for March, the first report to reflect the war’s impact on consumer prices, on April 10.