WASHINGTON, April 20 (Reuters) – U.S. retail sales increased more than expected in March as the war with Iran boosted gasoline prices and receipts at service stations, while tax refunds supported spending elsewhere.
Retail sales jumped 1.7% last month after an upwardly revised 0.7% gain in February, the Commerce Department’s Census Bureau said on Tuesday. Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, advancing 1.4% after a previously reported 0.6% increase in February. Estimates ranged from as high as a 2.0% increase to as low as a 0.4% gain.
Sales were also lifted by a rise in auto sales, likely as manufacturers offered incentives. The Census Bureau has now caught up on releasing monthly retail sales data after delays caused by last year’s government shutdown. April’s retail sales report will be published on schedule next month.
The U.S.-Israeli conflict with Iran has sent global oil prices jumping more than 30%, with data from the U.S. Energy Information Administration showing retail gasoline prices soared 24.1% in March.
There are worries that pain at the pump could pull spending away from other segments, and cut into tax refunds, which are running below the U.S. Treasury Department’s expectations.
Economists at the Stanford Institute for Economic Policy Research estimated that war-driven price spikes have pushed up Americans’ average annual gasoline costs for this year by $857.
The average tax refund was up $351 through March 27 compared to the same period in 2025, Internal Revenue Service data showed. The Treasury Department estimated that the average tax refund would be $1,000 higher compared to the 2024 fiscal year.
Consumer sentiment plunged to a record low in April.
Retail sales excluding automobiles, gasoline, building materials and food services increased 0.7% in March after an upwardly revised 0.6% rise in February.
These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product, and were previously reported to have climbed 0.5% in February.
Economists believe growth in consumer spending slowed further from the fourth quarter’s 1.9% annualized rate. The Atlanta Federal Reserve’s GDPNow model is tracking a 1.3% growth pace for the January–March quarter. The economy grew at a 0.5% rate in the fourth quarter. The government is scheduled to release the advance first-quarter GDP estimate next week.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)
