Gas Prices Haven’t Hurt Retail Spending

Retail spending surprised analysts with an upswing in March, but the headline strength came with a familiar caveat: higher prices at the pump did much of the heavy lifting, even as underlying demand held together. Online sales continued to show momentum, as well.

Advance estimates from the U.S. Census Bureau on Tuesday (April 21) show retail and food services sales climbed 1.7% month over month to $752.1 billion, with gasoline station sales jumping 15.5% as fuel costs moved higher. Strip out autos and gasoline, and the gain narrows to 0.6%, a more restrained pace that still points to ongoing, if uneven, consumer activity.

That pattern aligns closely with what PYMNTS Intelligence has been tracking for months: sentiment does not move in a straight line, and neither does spending. Instead, how consumers feel about their finances translates directly into where they deploy their dollars and where they pull back.

The latest PYMNTS Consumer Expectations Index makes clear that sentiment remains divided along one primary fault line: cash flow.

That divide shows up in the retail data. Households with financial flexibility continue to spend across categories, while those under strain concentrate their budgets on essentials and absorb price shocks with fewer degrees of freedom. The result is a retail landscape where topline growth can coexist with pockets of hesitation.

Resilience With Guardrails

The March retail figures reflect that dynamic. Gains were spread across several discretionary and semi-discretionary categories, suggesting that consumers have not retreated wholesale from goods spending.

Furniture and home furnishings stores rose 2.2% on the month. Electronics and appliance stores gained 0.9% and were up 5.2% year over year. General merchandise stores advanced 1%, with department stores posting a 4.2% monthly increase. Nonstore retailers, a proxy for eCommerce, climbed 1% and are now more than 10% higher than a year ago.

Those figures point to continued willingness to spend beyond immediate necessities, even as macro pressures persist. At the same time, some categories reveal the limits of that resilience. Motor vehicle and parts dealers were up modestly month to month but remain down year over year, a sign that larger-ticket purchases remain sensitive to financing costs and broader uncertainty.

The PYMNTS data reinforces that caution. The overall macro and spending climate index stood at 48.9 in February, below neutral, while buying conditions came in even lower at 47.9.
Consumers are still spending, but they are not uniformly convinced that conditions warrant bigger commitments.

Food and Fuel Frame the Tradeoffs

Nowhere are those tradeoffs clearer than in food and fuel. Grocery store sales rose 0.9% in March and are essentially flat year over year, indicating steady but unspectacular growth. Food services and drinking places edged up just 0.1% on the month.

Contrast that with gasoline stations, where sales surged both month over month and year over year. The divergence underscores how rising fuel costs can distort the overall retail picture while forcing consumers to recalibrate spending elsewhere.

Consumers are, in effect, making careful substitutions. They continue to spend on goods and maintain baseline consumption, but they remain alert to shocks, whether from energy prices or broader economic signals.

A Balancing Act Still in Motion

Taken together, the March retail data and PYMNTS Intelligence findings describe an economy where spending persists not because pressures have eased, but because households are adapting in real time.

Higher gas prices did not derail retail activity, but they did reshape it.  The balancing act remains intact for now. Whether it holds will depend less on any single data point and more on whether consumers continue to feel stable enough to keep spending, even when the cost of doing so rises.