U.S. retail and food services sales climbed for a third consecutive month in April, though higher gasoline prices driven by the war with Iran accounted for part of the gain, according to the Census Bureau.
Total sales reached $757.1 billion, up 0.5% from March and up 4.9% from April 2025. March's initially reported 1.7% gain was revised down to 1.6%. The data carry an important caveat: no inflation adjustment is applied, meaning a portion of any dollar increase may stem from rising prices rather than shoppers buying more goods.
Gasoline prices rose 12.3% in April, according to Reuters. According to Bloomberg, gains were broad-based, with 9 of 13 categories finishing in positive territory. Among the winners were sporting goods retailers, e-commerce platforms, and electronics stores, though auto dealers saw a decline. The Iran conflict helped drive gas station receipts up 2.8%, carrying pump prices to levels not seen since 2022. Grocery spending also climbed, a trend analysts attributed largely to escalating food costs.
A closely watched subset of the data — one that strips out food services, auto dealers, building materials stores, and gas stations and serves as an input into GDP estimates — came in at a 0.5% gain, beating expectations. Strip away only gas stations, and the broader retail advance narrows to 0.3%, according to Bloomberg — the most modest showing in three months.
The retail data for April offers the latest evidence of how the Iran war has reshaped consumer spending. March's retail sales surged 1.7% — the largest monthly gain in three years — but most of that increase came from a 15.5% jump in gas station receipts. The war, which began Feb. 28, has disrupted traffic through the Strait of Hormuz and squeezed global crude supplies, keeping fuel costs elevated even after a temporary ceasefire.
One factor that helped offset elevated fuel costs was a fatter-than-normal refund season: IRS figures show the average check issued through April 25 ran $323 ahead of the comparable 2025 figure. That buffer, however, appears to be eroding. PNC Financial $PNC economists, drawing on proprietary spending data, found that households are burning through their refunds at a quicker clip than in prior years, with the acceleration most pronounced among those at the lower end of the income scale.
Signals elsewhere in the economy are less encouraging. A widely tracked gauge of consumer confidence hit an all-time low in early May, according to Bloomberg, and paychecks are losing ground to rising prices. Household expenditures, the engine behind more than two-thirds of overall economic output, expanded at just a 1.6% annualized pace in the first quarter — a step down from the 1.9% rate recorded in the final three months of 2025.