Updated at 9:48 am EST
US retail sales growth slowed again in March, Commerce Department data showed on Thursday, as record high gas prices and rising inflation appear to have hit discretionary consumer spending.
Retail sales in March rose 0.5% from the previous month to a total of $665.7 billion, the Commerce Department said, just below the Street consensus forecast of 0.6%. The February total was tightly revised to a 0.8% gain, the Commerce Department report showed, from an initial estimate of a 03% rise.
Excluding the auto sector, retail sales rose 1.1% in March, the Commerce Department report found, while retail sales of autos and auto parts fell 1.9%.
“The Russia-Ukraine shock weighed on consumer spending in March, with sharp declines in spending excluding money spent at gas stations,” said Bill Adams, chief economist at Comerica Bank.
“The boost from fiscal stimulus is fading, interest rates on credit cards, car loans and mortgages are rising, and gas costs have skyrocketed in the wake of Russia’s invasion of Ukraine. ” he added.
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US stocks were mixed early after the data release, with the Dow Jones Industrial Average up 205 points on solid gains from UnitedHealth (UNH) – Get the UnitedHealth Group Incorporated and Goldman Sachs report (GS) – Get the Goldman Sachs Group, Inc. report – and the S&P 500 moves down 3 points
Benchmark 10-year Treasury bond yields rose to 2.762% after the data release, while the dollar index was up 0.05% at 99.855 during the session against a basket of six global currencies.
Gasoline prices hit a record 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 boost the dollar value of gas sales embedded in the retail sales headline but also likely cut spending in discretionary categories, also hit by the fastest inflation in forty years and the fading federal government’s Covid stimulus payments.
US inflation accelerated again last month to its highest pace in four decades, although a slight decline in core consumer prices suggests that pressures may ease in the summer months.
The headline consumer price index for the month of March is estimated to have risen 8.5% yoy, down from a pace of 7.9% in February and the highest rate since December 1981. On a monthly basis, inflation rose 1.2%, the BLS said, with both figures beat Wall Street forecasts.
Indeed, late Monday, White House Press Secretary Jen Psaki had warned Americans to expect “exceptionally high” levels of inflation from last month, in part due to the impact of Russia’s war on Ukraine on food and energy prices is due.
US crude oil futures hit a 10-year high of $123.70 a barrel last month in the wake of Moscow’s invasion and threats of sanctions on energy exports, while wheat and other food prices fell on reports of damaged crops and related grain embargoes skyrocketed with the conflict.