Retail sales up 1.7% in March from February driven by a spike in gas
prices due to the Iran war
[April 22, 2026] By
ANNE D'INNOCENZIO
NEW YORK (AP) — Shoppers accelerated their spending in March from
February, but they spent a good chunk of their money at the gas pump.
A spike in gas prices due to the Iran war, now in its eighth week,
resulted in a hefty 1.7% gain in retail sales in March after a revised
0.7% increase in February, according to the Commerce Department’s report
on Tuesday. The figure marked the fastest one-month increase in retail
sales in more than three years.
The report marks the first read on spending to capture the effects of
the Iran war.
Excluding gas prices, retail sales were up 0.6%, helped in part by
government tax refunds and warm weather.
Business at gas stations rose 15.5% percent.
Elsewhere, shoppers were still willing to spend. Sales at department
stores rose 4.2%, while sales at furniture and home furnishings stores
were up 2.2%. Online retailers saw a 1% gain. Consumer electronics and
appliance stores posted a 0.9% increase. The only area that saw a
decline for March was miscellaneous retailers, according to the Commerce
report.
The snapshot offers only a partial look at consumer spending and doesn’t
include things like travel and hotel stays. The lone services category –
restaurants – registered a more modest gain of 0.1%.
The so-called control group—which excludes food services, autos,
building materials and gas station sales and is used to calculate
economic growth—rose 0.7%. That offered a good sign of broad spending by
consumers, economists said.
“It’s a blowout retail sales figure for March,“ Heather Long, chief
economist at Navy Federal Credit Union, wrote in a report.
She noted that the impact of tariffs is visible in the high spending on
electronics and appliances due to higher prices. A small increase at
restaurants may indicate some early signs of pullback as consumers have
to spend more at the pump, she said.
“Overall, the American consumer is still healthy,” she added. "Extra
income from tax refunds is helping many households weather this oil
shock, but that extra money won’t last forever.”
The Iran war began Feb. 28 and has shut down the Strait of Hormuz,
cutting off one-fifth of the world’s oil supply.
Late last month, U.S. gas prices jumped past an average of $4 a gallon
for the first time since 2022.
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A woman carries reuable shopping bags to her car on Monday,
March 16, 2026, in Portland, Ore. (AP Photo/Jenny Kane, File)
 Economists had believed that an
unusually large jump in tax refunds would kick start spending at the
start of the year. But spiking gas prices are taking a bite out of
that money. And the Iran war is also further dampening shoppers'
mood. Consumer sentiment plunged to a record low in April, according
to a survey released earlier this month by the University of
Michigan, largely because of the Iran war and concerns over higher
gas prices.
Shoppers aren’t just feeling it at the gas pump, but are also
starting to see unforeseen costs everywhere, including when they
travel such as higher baggage fees. They will also likely see higher
prices on different products ripple through the supply chain as
companies start to pass on higher transportation costs to shoppers,
analysts said.
The jump in gas prices caused a sharp spike in inflation last month,
creating major challenges for the inflation-fighters at the Federal
Reserve and increasing already significant political hurdles for the
White House.
Consumer prices rose 3.3% in March from a year earlier. On a monthly
basis, prices rose 0.9% in March from February, the largest such
gain in nearly four years.
Heading into the war, shoppers were already cautious. But Bryan
Eshelman, Americas leader of retail and a partner and managing
director at consultancy AlixPartners, noted his retail clients see
their customers pulling back even more now.
“Particularly in the low-end economy, people are shifting from wants
to needs,” he said.
R.J. Hottovy, head of analytical research at Placer.ai, noted that
for seven straight weeks, traffic at nondiscretionary retailers like
grocers outpaced that of discretionary merchants. That trend was
reversed the week of April 6, helped by the distribution of tax
refunds and spending tied to spring break and Easter.
But after the data goes past Easter trends, future visits will
largely depend on consumer sentiment regarding broader macroeconomic
conditions and gas prices, Hottovy said. The firm tracks people’s
movements based on cellphone usage.
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