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Retail Sales Growth Impresses In April Even As Inflation, Gas Price Surge Bites

The dollar value of U.S. retail sales topped $677 billion last month, the Commerce Department said Tuesday.

Updated at 8:54 am EST

U.S. retail sales growth steadied in April, data from the Commerce Department indicated Tuesday, as record high gas prices and surging inflation failed to deter spending in the world's biggest economy.

April retail sales rose 0.9% from the previous month to a collective $677.7 billion, the Commerce Department said, largely in line with the Street consensus forecast and the fourth consecutive monthly gain. The March total was revised firmly higher, to 1.4%, the Commerce Department report showed, from the original estimate of a 0.5% advance.

Stripping out the auto sector, March retail sales were up 0.6%, the Commerce Department report noted, while stand-alone sales of gasoline fell 2.7%.

"Consumers seem to not be deterred by inflation after April saw a 0.9% increase in retail sales following March’s 0.5% increase," said Marwan Forzley, CEO of payments processing group Veem. "With the expected travel boom later this year, I don’t anticipate this sentiment to change as we head into the next report.'

"Consumers are eager to travel and the warmer months contributed heavily to strong retail performance in April, a good sign for seasonal businesses," he added.

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U.S. stocks were modestly higerh following the data release, with the Dow Jones Industrial Average indicating a 385 point opening bell gain -- thanks to solid earnings from Home Depot  (HD) - Get Home Depot Inc. (The) Report that offset a disappointing report from Walmart  (WMT) - Get Walmart Inc. Report -- and the S&P 500 moving 58 points to the upside.

Benchmark 10-year Treasury note yields bumped higher, to 2.942% following the data release while the dollar index was marked 0.6% lower on the session at 103.352 against a basket of six global currencies.

Gasoline prices hit a record high national average of $4.523 this week, according to AAA data, as oil prices surged in the wake of Russia's invasion of Ukraine and OPEC's reluctance to boost its collective production. 

U.S. inflation eased modestly from the fastest pace in four decades last month, but core consumer price pressures continued to bubble higher, suggesting a longer-than-expected run of elevated readings in the world's biggest economy.

So-called core inflation, which strips-out volatile components such as food and energy prices, rose 0.6% on the month, and 6.2% on the year, near the highest since February of 1991.

Huge increases in airfares, which were up 33% from last year, as well as used car prices and veterinary fees and delivery service costs contributed to the core price gains, which suggest inflation pressures may be more deeply imbedded.

The CME Group's FedWatch tool, meanwhile, suggests at least at 21.1% chance of a 75 basis point rate hike in July, despite assurance from Federal Reserve Chairman Jerome Powell that such a move is not being "actively considered" by his colleagues on the Open Markets Committee.

Powell will also speak at the Wall Street Journal's 'Future of Everything' event at 2:00 pm Eastern time today.

The Atlanta Federal Reserve's GDPNow forecasting tool, a real-time benchmark, suggests U.S. economic growth has now slowed to a 1.8% clip, compared to the -1.4% contraction estimate for the three months ending in March.