Updated at 9:48 am EST
U.S. retail sales growth eased again in March, data from the Commerce Department indicated Thursday, as record high gas prices and surging inflation looks to have hit discretionary consumer spending.
March retail sales rose 0.5% from the previous month to a collective $665.7 billion, the Commerce Department said, just shy of the Street consensus forecast of a 0.6% advance. The February total was revised firmly to a gain of 0.8%, the Commerce Department report showed, from the original estimate of a 03% advance.
Stripping out the auto sector, March retail sales were up 1.1%, the Commerce Department report noted, while stand-alone sales of cars and car parts fell 1.9%.
“The Russia-Ukraine shock was a drag on consumer spending in March, with outright declines in spending aside from money spent at gas stations,” said Bill Adams, chief economist for Comerica Bank.
“The boost from fiscal stimulus is petering out, interest rates on credit cards, car loans, and mortgages are rising, and the cost of gas has surged after Russia’s invasion of Ukraine; these issues are collectively a meaningful headwind to consumer spending in 2022,” he added.
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U.S. stocks were mixed in early following the data release, with the Dow Jones Industrial Average rising 205 points — thanks to solid earnings from UnitedHealth (UNH) – Get UnitedHealth Group Incorporated Report and Goldman Sachs (GS) – Get Goldman Sachs Group, Inc. Report — and the S&P 500 moving 3 points to the downside
Benchmark 10-year Treasury note yields jumped higher, to 2.762% following the data release while the dollar index was marked 0.05% lower on the session at 99.855 against a basket of six global currencies.
Gasoline prices hit a record high national average of $4.311 in early March, according to AAA data, as oil prices surged in the wake of Russia’s invasion of Ukraine.
The move will add to the dollar value of gas sales, which are embedded in the headline retail sales reading, but also likely trimmed spending in discretionary categories, which have also been hit by the fastest inflation in forty years and the fading of federal government Covid stimulus payments.
U.S. inflation accelerated to the fastest pace in four decades again last month, although a slight retreat in core consumer prices suggests pressures may be easing heading into the summer months.
The headline consumer price index for the month of March was estimated to have risen 8.5% from last year, up from the 7.9% pace in February and the fastest rate since December of 1981. On a monthly basis, inflation was up 1.2%, the BLS said, with both tallies topping Wall Street forecasts.
White House Press Secretary Jen Psaki, in fact, had warned Americans late Monday to expect an “extraordinarily elevated” level of inflation from last month’s reading, thanks in part to the impact on food and energy prices from Russia’s war on Ukraine.
U.S. crude futures hit a ten-year high of $123.70 per barrel last month in the immediate wake of Moscow’s invasion and the threat of sanctions on energy exports, while wheat and other food prices leaped on reports of damaged crops and grain embargoes linked to the conflict.