US retail sales surge 1.7% in March as soaring gas prices drive spending spike

US retail sales surge 1.7% in March as soaring gas prices drive spending spike

Americans felt the strain of sharply rising gas prices in March, but consumers still managed to keep spending in other areas of the economy.

A war-driven surge in fuel costs pushed US retail sales up 1.7% in March—the fastest monthly increase in more than three years—according to data released Tuesday by the Commerce Department. The figure marked a significant jump from February’s 0.7% gain and slightly exceeded economists’ expectations of a 1.6% rise.

While retail sales data accounts for seasonal changes, it does not adjust for inflation. Consumer prices climbed 0.9% in March—three times February’s pace—highlighting the growing cost pressures facing households.

Gas prices soared amid conflict involving Iran and the closure of the Strait of Hormuz, a key global oil shipping route responsible for transporting roughly one-fifth of the world’s supply. As a result, gasoline station sales surged 15.5% compared to the previous month, playing a major role in the overall retail increase.

Excluding gasoline, retail sales rose a more modest 0.6% in March, slightly below February’s 0.7% gain. Still, spending remained relatively broad-based. Furniture and home furnishings sales climbed 2.2%, while categories like electronics and building materials also showed resilience.

Analysts say consumers are being supported, for now, by strong tax refunds, wage growth, savings, and access to credit. These factors have helped cushion the impact of higher fuel costs on household budgets.

However, signs of strain are beginning to emerge. Apparel sales remained flat, and restaurant spending edged up just 0.1%, suggesting that some consumers are cutting back on discretionary expenses.

Economists note that gasoline is a non-negotiable expense, especially for lower-income households where it makes up a larger share of monthly spending. As fuel costs rise, families may be forced to reduce spending elsewhere, opting to stay in rather than dine out, for example.

While financial buffers such as savings and tax refunds are helping consumers cope, experts warn these supports are not unlimited. Prolonged high prices could erode savings, outpace wage gains, and increase reliance on debt.

The outlook now hinges on how long the geopolitical conflict—and its impact on energy markets—will persist. A shorter duration could limit economic damage, but a prolonged crisis may place greater pressure on consumers and the broader economy in the months ahead.