Gas prices drive up March retail sales

US retail sales rose 1.7% month over month to $752.1 billion, and 4% YoY in March, the Commerce Department reported this week. The Commerce Department also revised February’s monthly sales increase from 0.6% to 0.7%.

High prices at the pump were largely to blame for the jump, as gas sales rocketed 15.5% from the previous month and 18.1% YoY. Gas prices soared 21.2% month over month in February, the US Bureau of Labor Statistics reported earlier this month. Excluding gas and motor vehicle sales, retail sales increased 0.6% month over month and 4.2% YoY.

Nonstore retailers, made up largely of e-commerce sales, saw a 1% month over month and 10.1% YoY increase in March. E-commerce marketing company Omnisend reported earlier this month that higher gas prices, which it found is the highest cost concern among consumers, could be encouraging consumers to shop more online.

General merchandise stores got a 1% month over month sales gain in March, with department stores notching 4.2% sales growth month over month and 0.8% YoY. Grocery store sales rose 0.9% from February and 0.2% YoY. Health and personal care stores saw a 0.5% monthly and 1.6% annual sales bump. Clothing stores’ sales were flat month over month, but saw a 7.2% YoY increase. Miscellaneous store retailers was the only retail category that recorded a drop in monthly sales, down 0.9%, while sales were up 9.8% YoY.

While this week’s release was the first to reflect the impact from the US and Israel’s war with Iran, Circana noted this week that rising gas prices’ effect on consumer spending could take time to become evident. Middle-income households have become the latest consumer group to pull back on spending, Circana, said, marking the shift from a K-shaped to “dipping E” economy.

“Income-based shifts have the potential to lead retail to a particularly challenging position,” Circana’s Chief Retail Industry Advisor Marshal Cohen said. “Today’s retail environment requires retailers and manufacturers to recognize when growth is driven by sustainable demand versus temporary distortion.”