The numbers: Sales at U.S. retailers rose a mild 0.5% in March and a large part of the increase reflected higher gasoline prices, suggesting inflation is taking a toll on U.S. households.
Economists polled by The Wall Street Journal had forecast a 0.6% advance.
If gas stations and auto dealers are set aside, retail sales rose an even smaller 0.2% last month.
Retail sales are a big part of consumer spending and offer clues on the strength of the U.S. economy. While Americans are still buying lots of goods and services, they often simply just paying more money.
The cost of living jumped 1.2% in March, according to the consumer price index. Adjusted for inflation, retail sales fell sharply in March.
One bit of good news: Sales in February were revised up to show a 0.8% increase instead of 0.3%, the government reported Thursday.
| U.S. retail sales in March | +0.5% |
| Autos & parts | -1.9% |
| Home furnishings | 0.7% |
| Electronics & appliances | 3.3% |
| Home & garden centers | 0.5% |
| Food & beverages | 1% |
| Health & personal care | -0.3% |
| Gasoline stations | 8.9% |
| Clothing | 2.6% |
| Sporting goods & hobbies | 3.3% |
| General stores | 5.4% |
| Miscellaneous stores | 0.8% |
| Internet (nonstore) retailers | -6.4% |
| Bars & restaurants | 1% |
Big picture: High inflation is outstripping wage gains for workers and pinching households budgets. Americans are thinking twice about what they buy and how much and seeking out cheaper alternatives.
The level of spending is still sufficient to keep the economy growing, but the Federal Reserve is moving to rapidly raise interest rates in an effort to tame runaway inflation. Higher rates could eventually act as a drag on spending and the broader U.S. economy.
Key details: Gas stations posted an 8.9% increase in sales last month — the biggest increase in a year — but that’s not a good thing for households or the economy. Higher gas prices squeeze families and leave them less money to spend on other goods and services.
Sales at auto dealers sank 1.9%. Auto sales have been up and down because of ongoing shortages of new vehicles. Auto sales account for about one-fifth of overall retail spending.
The March retail sales report might not offer much new insight into the growth of the economy. Easter occurred much later than usual, for one thing, and shifted some spending that normally would have taken place in March into April.
Nor does the report reveal much about spending on the much larger category of services. The 1% in sales at restaurants, however, was a good sign. Eating out is one of the first things Americans cut back on when they lose confidence in the economy.
There were a few other good signs in the report. Sales at electronics stores such as Best Buy jumped 3.3% — almost triple the rate of inflation. Consumers also spent a lot more on other discretionary goods such as clothes and hobby items.
Still, it’s likely that higher gas and grocery prices are siphoning off some spending on discretionary items.
One oddity: Sales at Internet retailers sank a surprising 6.4%. Internet sales are still rising overall, but they have been up and down since last fall.
Market reaction: The Dow Jones Industrial Average DJIA, +1.01% and S&P 500 SPX, +1.12% were set to open mixed in Thursday trades.
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