US retail sales surge in March on higher gasoline prices

• Gasoline prices soared 24.1% in March as the Iran conflict pushed global oil prices up more than 30%, adding an estimated $857 to Americans' average annual gasoline costs
• Core retail sales (excluding autos, gas, building materials, and food services) rose a more modest 0.7%, suggesting underlying consumer spending growth slowed from Q4's 1.9% annualized rate
• Tax refunds averaged $351 higher through March 27 versus 2025, below Treasury expectations of a $1,000 increase, potentially limiting consumers' ability to absorb higher fuel costs

Summary: US Retail Sales Surge in March on Higher Gasoline Prices

Key Figures:

U.S. retail sales jumped 1.7% in March, exceeding economist forecasts of 1.4%. February sales were revised upward to 0.7% growth from the previously reported 0.6%. Core retail sales (excluding automobiles, gasoline, building materials, and food services) rose 0.7%, beating the prior 0.6% increase.

Primary Driver:

The U.S.-Israeli conflict with Iran drove global oil prices up over 30%, with retail gasoline prices soaring 24.1% in March according to the U.S. Energy Information Administration. This added an estimated $857 to Americans' average annual gasoline costs, according to Stanford Institute for Economic Policy Research.

Supporting Factors:

• Tax refunds bolstered spending, averaging $351 higher through March 27 compared to 2025
• Increased auto sales driven by manufacturer incentives
• Service station receipts rose alongside fuel prices

Market Concerns:

• Consumer sentiment plunged to a record low in April
• Economists worry elevated gas prices will divert spending from other sectors and erode tax refund benefits
• Treasury Department's tax refund expectations ($1,000 higher vs. fiscal 2024) may not materialize

Economic Outlook:

Consumer spending growth appears to be slowing. The Atlanta Federal Reserve's GDPNow model projects 1.3% growth for Q1, down from Q4's 1.9% annualized rate. The advance Q1 GDP estimate is scheduled for release next week.

Note: Retail sales data is not inflation-adjusted, meaning much of March's nominal increase reflects higher prices rather than increased volume of purchases.