WASHINGTON, April 20 (Reuters) – U.S. retail sales rose more than expected in March as the war with Iran boosted gasoline prices and revenue at gas stations, while tax refunds supported spending elsewhere.
Retail sales rose 1.7% last month after an upwardly revised 0.7% gain in February, the Commerce Department’s Census Bureau said Tuesday. Economists polled by Reuters had forecast that retail sales, which are mostly goods and are not adjusted for inflation, would advance 1.4% after a previously reported 0.6% rise in February. Estimates ranged from an increase as high as 2.0% to an increase as low as 0.4%.
Sales were also boosted by an increase in auto sales, likely because manufacturers offered incentives. The Census Bureau has caught up with releasing monthly retail sales data after delays caused by the government shutdown last year. The April retail sales report will be released as scheduled next month.
The conflict between the United States and Israel with Iran has caused global oil prices to soar by more than 30%; Data from the US Energy Information Administration shows that retail gasoline prices soared 24.1% in March.
There are concerns that difficulties at the pump could draw spending away from other segments and reduce tax refunds, which are “below the U.S. Treasury Department’s expectations.”
Economists at the Stanford Institute for Economic Policy Research estimated that war-induced price increases have raised the average annual cost of gasoline for Americans this year by $857.
The average tax refund increased $351 through March 27 compared with 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 “fiscal year 2024.”
Consumer confidence fell to a record low in April.
Retail sales, excluding automobiles, gasoline, building materials and food services, rose 0.7% in March, following an upwardly revised 0.6% increase in February.
These so-called core retail sales correspond more closely to the consumer spending component of gross domestic product, and were previously reported to have increased 0.5% in February.
Economists believe consumer spending growth slowed further from the 1.9% annualized rate in the fourth quarter. The Atlanta Federal Reserve’s GDPNow model registers a growth rate of 1.3% for the January-March quarter. The economy grew at a rate of 0.5% in the fourth quarter. The government is scheduled to release the advance estimate of first-quarter GDP next week.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)