US Markets
US Retail Sales Rise for Third Month, Lifted by Higher Fuel Prices
US retail sales in April rose for the third straight month, with analysts saying the increase largely reflected higher prices as the war in Iran kept fuel costs elevated.Sales rose 0.5% in April following a revised 1.6% gain in March, the Census Bureau reported Thursday, matching the consensus in a survey compiled by Bloomberg.Gasoline station receipts climbed 2.8% last month after a nearly 14% jump in March. Food and beverage store sales increased 0.8% following a 1% rise the prior month, while electronics and appliance stores posted a 1.4% gain after 1.3% in March."As expected, retail and food services, which are measured in nominal terms, rose in April, boosted by higher prices," Leslie Preston, managing director at TD Economics, said in a report.Data earlier this week showed US consumer inflation accelerated in April to the fastest pace in almost three years as energy prices surged amid the near-complete closure of the Strait of Hormuz. Producer prices also rose at the quickest pace in four years, underscoring broad inflation pressures.On Thursday, Census Bureau data showed sales at furniture and home furnishings stores, motor vehicle and parts dealers, and clothing and accessories retailers all declined after gains in March."A price-led surge in gasoline station receipts was tempered by a pullback in sales of automobiles, clothing, and furniture," Sal Guatieri, senior economist at BMO Capital Markets, said in a report.Excluding motor vehicle and gasoline, retail sales rose 0.5% in April, beating the 0.3% gain expected on Wall Street, after a 0.7% gain in March. Without autos, sales increased 0.7% as forecast, following a 1.9% jump in the prior month."Surprisingly firm underlying retail sales in April suggest another quarter of moderate consumer spending growth, though higher inflation is bound to take a toll," Guatieri said. "Inflation pressures are mounting due to the Iran conflict and could take a larger toll on overall spending."President Donald Trump recently rejected Iran's counteroffer to end their war, though a fragile ceasefire between the two countries still holds while the Strait of Hormuz, the world's most important chokepoint for crude flows, remains largely shut.Trump is in Beijing this week for a meeting with Chinese President Xi Jinping, with the agenda expected to include the conflict in Iran."Consumers are still contending with higher gasoline prices (in) May, and that is likely to take a toll on discretionary purchases," TD's Preston said. "In the near term, higher tax refund checks and lower income taxes will provide some cushion."
