US retail sales strong in February; rising gasoline prices will hurt spending

By Lucia Mutikani

WASHINGTON, April 1 (Reuters) - U.S. retail income accrued by the astir successful 7 months successful February arsenic centrifugal conveyance purchases rebounded and temperatures warmed up, but surging gasoline prices due to the fact that of warfare successful the Middle East were expected to crimp spending successful the months ahead.

The Commerce Department's delayed study connected Wednesday suggested that the system was connected coagulated footing earlier the U.S.-Israeli warfare with Iran. The conflict, which ‌started astatine the extremity of February, has sent planetary lipid prices surging much than 50%, and the nationalist mean retail gasoline terms this week topped $4 a gallon for the archetypal clip successful much than 3 years.

A prolonged warfare ‌and further increases successful gasoline prices could offset immoderate of the anticipated boost to user spending and the wide system from taxation cuts, economists warned. They expected the struggle to measurement connected maturation successful the 2nd quarter.

"I expect user spending to beryllium softer successful the archetypal fractional of the twelvemonth than would ​have been the lawsuit successful the lack of the surge successful gasoline prices, but I task that vigor prices volition recede importantly wrong a fewer months, allowing existent outlays to rebound successful the 2nd fractional of the year," said Stephen Stanley, main U.S. economist astatine Santander U.S. Capital Markets.

Retail income roseate 0.6%, the largest summation since past July, aft an upwardly revised 0.1% dip successful January, the Commerce Department's Census Bureau said. Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, rising 0.5% aft a antecedently reported 0.2% driblet successful January.

The Census Bureau is inactive catching up connected information releases pursuing delays caused by past year's authorities shutdown.

Some of the summation successful retail income reflected higher gasoline prices, which had started rising successful anticipation of the ‌Middle East war. In summation to costly gasoline, consumers are besides facing higher prices astatine ⁠the supermarket stemming from President Donald Trump's tariffs.

The wide emergence successful income was partially driven by taxation refunds. The mean refund was up $350 done March 20 compared to the aforesaid play successful 2025, Internal Revenue Service information showed.

"Tax refunds are virtually redeeming the economy's bacon successful the archetypal quarter," said Christopher Rupkey, main economist astatine FWDBONDS. "Inflated user goods are much affordable astatine slightest until the income ⁠tax refunds tally out."

Receipts astatine car dealerships rebounded 1.2% amid promotions and discounts, aft dropping 0.7% successful January.